Bulls dominate, lift index above 42,000
Bulls took charge and dominated trading at the bourse during the current week, lifting the KSE-100 index above the 42,000-point mark owing to several positive triggers and developments.
The week started on a negative note as investors awaited the Election Commission’s verdict in the foreign funding case. However, the trend flipped and the market saw a healthy momentum on the back of verdict against the PTI.
Moreover, Pakistan met the final requirement for the International Monetary Fund’s (IMF) loan tranche of $1.2 billion by raising the petroleum development levy, which fuelled bullish sentiment in the market.
The rupee appreciated against the US dollar in the inter-bank market, which also helped the bourse maintain the positive momentum.
On Wednesday, the stock market surged 877.26 points as the rupee strengthened 4.19% against the US dollar. Furthermore owing to the IMF’s nod, the rally became stronger.
The market ended four out of the five sessions in the green. Investors also reacted to the rollover of $2 billion Chinese loan and continued their buying activity. This helped the bourse maintain the winning streak and the index advanced for two successive sessions.
Last session tossed the index above the 42,000-point mark in the wake of easing global energy markets where oil and coal prices came under some correction.
The KSE-100 index closed the week positive and settled at 42,096, up 1,946 points week-on-week.
“Clarity on the political front, sharp appreciation of Pakistani rupee against the US dollar and positive development on the IMF front supported the market rally during the week as the KSE-100 index gained 1,946 points to close at 42,096,” said JS Global analyst Faisal Irfan.
Volumes increased 79% week-on-week with an average of 269 million shares traded per day.
Key outperformers during the week were refinery (13%), engineering (11%), chemical (9%) and cement (8%) sectors.
The week started with the announcement of Election Commission’s verdict in the foreign funding case against the PTI, which reduced political noise to a considerable extent.
Moreover, Pakistani rupee appreciated 6.7% against the US dollar, reversing the recent trend of sharp depreciation.
Along with that, the IMF’s resident representative affirmed that Pakistan had met all prior conditions for the combined seventh and eighth review of the IMF programme.
Yields on Pakistan’s bonds declined considerably, which added to the positive investor sentiment.
On the news front, cement dispatches declined 47.7% year-on-year during July, inflation was reported at 24.9% - a 14-year high in July, and petrol prices declined Rs3.05 per litre while diesel prices increased Rs8.95 per litre, the analyst added.
Arif Habib Limited, in its report, said that the market commenced on a negative note during the week given inflation for July 2022 came in at 24.9%.
The sentiment turned positive after the IMF announced that Pakistan had fulfilled the last remaining pre-requisite for loan (incremental hike in petroleum development levy on petrol and diesel).
With the renewed hope, Pakistani rupee strengthened against the greenback, gaining Rs15.33, or 6%, week-on-week to close at Rs224.04 at the end of the week.
Furthermore, trade deficit significantly declined in July 2022, down 47% month-on-month. Moreover, reduction in international oil prices post-OPEC+ meeting (WTI crude trading below $88 per barrel compared to $98.62 per barrel in the previous week) further cemented the ground for bulls.
The local bourse closed at 42,096, gaining 1,946 points (4.9%) week-on-week.
In terms of sectors, positive contribution came from banks (427 points), cement (421 points), fertiliser (112 points), chemical (111 points) and OMCs (106 points).
Sectors which contributed negatively included closed-end mutual fund (3 points) and Real Estate Investment Trust (1 point).
Meanwhile, stock-wise positive contributors were Lucky Cement (155 points), UBL (124 points), MCB (87 points), PSO (78 points) and Colgate-Palmolive (73 points).
However, negative contribution came from FABL (10 points), Mari Petroleum (6 points), ILP (4 points) and AICL (3 points).
Foreign selling was witnessed during the week, which came in at $0.69m compared to net buying of $0.57m last week.
Major selling was witnessed in banks ($0.9m) and fertiliser ($0.6m).
On the local front, buying was reported by brokers proprietary ($2.2m) followed by mutual funds ($1.6m).
Published in The Express Tribune, August 7th, 2022.
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