The stock market made a comeback with a bang as low inflation numbers along with improved macroeconomic numbers helped the benchmark KSE-100 index climb a whopping 1,571 points (4.6%) to close at a new all-time high of 35,456.
Rallies were seen in all major sectors as the index broke the 35,000-point barrier mid-week amid impressive volumes despite the month of Ramazan. Politics took a backseat while IMF’s approval for the next tranche and record high foreign exchange reserves also contributed to the positive sentiment at the bourse.
The week started off on a positive note and the trend continued throughout the rest of the week. With the start of the new fiscal year mid-week and the announcement of the inflation numbers, the market kicked into gear and ended the week with five sessions in the green and a gain of 1,571 points.
The biggest news of the week was the announcement of the inflation figures for the month of June 2015 which clocked in at 3.16%, well below the market consensus of 4%. Inflation figures for the complete fiscal year 2015 stood at only 4.35%, which was an 11-year low.
Market sentiment was further improved by the continuously improving macroeconomic situation of the country. The latest figures revealed the country’s foreign exchange reserves crossed $18.5 billion to hit a new record high. Furthermore, the IMF approved the eighth tranche to Pakistan which will further improve the forex reserves in the coming weeks.
The market’s rally was across the board and all major sectors at the bourse were beneficiaries. The banking sector was the standout performer after weeks of underperforming. The sector contributed 434 points to the index’s gains with MCB Bank leading the way with a weekly gain of 12.3%.
The cement sector, the darling of the market in recent times, continued its impressive performance on the back of impressive sales figures and in anticipation of further growth on increased public spending. The sector contributed 322 points to the index’s gains with all major manufacturers posting nearly double-digit growth during the week.
The fertiliser sector also continued to perform strongly after the government decided to postpone the July 1 implementation of the gas tariff hike due to Ramazan. The sector contributed 231 points to the KSE-100’s gains with Engro Corporation climbing 7.2% during the week.
The only sore point of the week was the continued sell-off by foreign investors. Foreigners offloaded a net of $3.6 million during the week, following up on the $16.1 million selling in the previous week. The foreign sell-off was however trumped by local institutional buying during the week.
While average daily volumes remained flat at 355.7 million shares traded per day, average daily values rose sharply by 19.9% and stood at Rs13.2 billion per day, reflecting higher interest in blue-chip stocks. The Karachi Stock Exchange’s market capitalisation stood at Rs7.60 trillion ($73.6 billion) at the end of the week.
Winners of the week
Punjab Oil Mills Limited manufactures and sells vegetable ghee, cooking oil, and laundry soap.
Bannu Woollen Mills
Bannu Woollen Mills Limited manufactures and sells woollen yarn, cloth and blankets.
Jahangir Siddiqui and Company
Jahangir Siddiqui and Company Limited is an investment company, offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.
Losers of the week
Nestle Pakistan Limited
Nestle Pakistan Limited manufactures, imports and sells dairy products, confectioneries, culinary products and fruit juices. The Group’s products include milk, butter, cream, noodles, coffees, and dietary and infant products.
Colgate Palmolive Pakistan Limited manufactures and sells detergents, personal hygiene, and a variety of other products.
Murree Brewery Company Limited specialises in the manufacture of beer and Pakistan Made Foreign Liquor. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.
Published in The Express Tribune, July 5th, 2015.
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