The Pakistan Stock Exchange bounced back with handsome gains as the bearish run from the preceding week came to an end on back of buoyant sentiments. The KSE-100 index soared 1,100 points or 2.7% in a rather eventful week to close above the 41,000-point barrier.
Heavy buying in refinery, auto and fertiliser sectors was the highlight of the week as investors shrugged off the ongoing political tension and resumed buying stocks.
The week started on a positive note as the KSE-100 index posted marginal gains, setting the trend for the rest of the week. The index maintained a steady rise for the remaining sessions and ended four out of five trading days in the green.
Investors cheered the upbeat foreign direct investment (FDI) data, which helped bulls dominate the local bourse on Monday. According to the statistics unveiled by the State Bank of Pakistan, FDI hit a six-month high at $189 million in September.
While uncertainty on the outcome of the Financial Action Task Force (FATF) announced, which was scheduled after the close of the week, slowed down gains, overall gains at the country’s stock market continued its upward momentum on Tuesday and Wednesday.
During the week, ongoing result season coupled with attractive valuations of stocks kept investors’ sentiment alive.
Moreover, the news of Pakistan’s current account registering a record surplus of $792 million in the first quarter of the current fiscal year unveiled by the central bank during mid-week lent further support to the positive momentum.
Unfortunately, the winning streak did not last as profit-taking, persistent economic concerns and ongoing political uncertainty led the index to slip in to the red zone on Thursday.
Uncertain oil prices in the international market also took toll on the local investors’ sentiment and battered the index-heavy - exploration and production - sector.
However, the despondency did not last as the stock market turned green for the last session of the week. Participants’ confidence revived as attractive corporate results caught their interest. Further optimism came from expectations of robust cement sales for the current month, which prompted a rally in cement stocks. “Also, most of the ongoing results in the banking sector beat market estimates by a wide range, leading to 2.3% week-on-week gains in the sector,” said JS Global analyst Amreen Soorani.
“The highlight of the week remained FATF’s plenary meetings that were held during October 21-23, where decision on status of Pakistan’s position in the grey list was to be announced after market hours on Friday.”
Furthermore, the rupee-dollar parity appreciated to Rs161.4 against the greenback (+0.7% week-on-week), a five-month high, supported bullish trend in the market.
Average daily volumes clocked-in at 466 million shares (up 57% week-on-week) while average value traded settled at $98 million (up 59% week-on-week).
In terms of sectors, positive contributions came from commercial banks (240 points), fertiliser (230 points), cement (226 points), automobile assemblers (73 points), and technology and communication (64 points).
Scrip-wise, top positive contributors were Engro Corporation (136 points), BAHL (133 points), Engro Fertilizer (61 points), Lucky Cement (60 points) and MEBL (57 points).
Foreign selling continued this week clocking-in at $6.9 million compared to a net sell of $2.7 million last week. Selling was witnessed in cement ($4.3 million) and fertiliser ($2 million). On the domestic front, major buying was reported by mutual funds ($7.6 million and companies ($4.8 million).
Among major highlights of the week were; International Monetary Fund, World Bank lowered growth projections, rupee gained 30 paisas to reach five-month high against dollar at Rs161.82, ECC unveiled fertiliser subsidy, formed body to set wheat price, foreign exchange reserves of SBP increased $269 million, OGRA took action against Hascol Petroleum, and textile exports increased by 11% year-on-year in September 2020.
Published in The Express Tribune, October 25th, 2020.
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