All sectors except oil witnessed stellar gains during the week. PHOTO: AFP
The stock market resumed normal service after a hiccup in the previous week with the benchmark KSE-100 index posting a gain of 775 points to hit a record high of 35,888 points during the week ended July 16.
The resolution of the Greek crisis and signing of the Iran nuclear deal were the major growth drivers this week and had a positive impact on the market. The oil and gas sector was the only laggard with all other sectors putting in a stellar performance.
The week started off on a strong note with the index rebounding sharply and making up the ground lost in the previous week. The index remained flat the following day before putting in two strong sessions, crossing the 36,000-point barrier intra-day on Thursday before closing slightly lower at end of trading on Thursday.
The biggest impact on the market came from outside the country as after months of heated talks, European leaders agreed to offer a new bailout for Greece which averted an imminent shakeup of the Euro zone, which in turn would have had a disastrous impact on global markets.
At the same time, world leaders also agreed with Iran which will see economic sanctions and embargos lifted on the country. The news bodes well for Pakistan as Iran offers a quick remedy to the country’s gas and oil requirements, if the Iran-Pakistan gas pipeline comes to fruition.
Almost all sectors at the bourse benefitted from these developments and rallies were witnessed in the banking, fertiliser and cement sectors which rose 4%, 4% and 2%, respectively. Habib Bank was the outstanding performer of the week, climbing 8.5% and adding 214 points to the KSE-100 index alone.
On the other hand, the index heavyweight oil and gas sector remained under pressure throughout the week as the Iran deal means Iranian oil will soon be available in an already oversupplied oil market which will drive down crude oil prices. The sector declined 4% during the week.
Macro data revealed during the week was also encouraging as remittances for the fiscal year 2015 clocked in at $18.5 billion, up by 16.5% over the previous year. It was also revealed that the country is likely to receive $337 million under the Coalition Support Fund this month which will further bolster the country’s foreign exchange reserve.
After almost a month of remaining net sellers, foreigners turned net buyers at the bourse and bought a net of $0.2 million worth of equity during the week as opposed to net selling of $23 million in the previous week.
Average daily volumes shot up by 26.7% and stood at 479.2 million shares traded per day. However, most of the trading was in low-priced scrips and average daily values fell 10% and stood at Rs14.6 billion per day. The Karachi Stock Exchange’s market capitalisation stood at Rs7.68 trillion ($75.1 billion) at the end of the week.
Published in The Express Tribune, July 18th, 2015.
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