KARACHI: The bulls ruled the roost at the Pakistan Stock Exchange (PSX) for the fourth successive trading week ended Friday, tossing the KSE-100 index to its all-time high at 36,694 points.

During the week, the benchmark index added 572 points (1.6 per cent) due to an aggressive buying by foreign and local investors. Individual investors, in particular, went berserk buying shares across-the-board. The major reason for the investors’ exuberance remained the prospect of Pakistan’s reclassification to the MSCI Emerging Market status; the results of the review would be declared on June 14.

Other than that the global crude venturing near the $47 per barrel gave boost to investors’ sentiments. Political developments also went on to swing the market on day-to-day basis.

Average daily volume rose 11pc to 325.4 million shares during the week whereas average daily value increased 1pc to Rs11.3bn. Foreign funds actively participated with buying and selling of shares worth $62.8m and $69.8m, respectively. Offshore investors activity was mainly seen in chemical sector with net buying of $2.1m and banks which saw net outflow of $3.6m. On balance foreigners were net sellers of $7m worth stocks during the week though the figure fell lower than the earlier week’s sell-off amounting to $12.71m.

According to dealers at AKD Securities, major gainers during the outgoing week were led by PPL 7.03pc, MCB 6.57pc, KEL 6.35pc, PTC 5.46pc and HASCOL 4.91pc. On the other hand, laggards included: NBP 2.33pc, HMB 1.99pc, BAFL 1.42pc, INDU 1.4pc and ASTL 1.39pc.

Analysts pointed out that the adversative market response to potential policy tightening in the US (June 2016) spilled over to other global bourses (MSCI FM and EM are down 1.8pc and 0.4pc week-over-week, respectively). JPY retreated slightly, much to the delight of local auto investors as PSMC and INDU took a breather. Rally in oil was triggered as Arab light did not hesitate to touch new CYTD highs of $47/bbl, up 2% WoW. Defying the inverse relationship in oil prices and margins, the chemical sector too cheered on amid margin accretion (DAAG, NRSL and LOTCHEM closed in the green). Also aiding market momentum was the pharma sector given an 8% hike in drug prices approved by DRAP.

Refinery sector gained 4.9pc triggered by 12pc rise in share price of Byco Petroleum (Byco) due to rising crude oil prices. Rise in international oil price to its 6-month high level also helped Oil and Gas Exploration sector rally 3.2pc led by Pakistan Petroleum (PPL) which was up 7pc after it announced discovery at one of its fields. Other major news highlights of the week included approval by Baluchistan cabinet to lease Sui Gas Field to PPL for next 10 years; 4.7pc YoY growth in Large Scale Manufacturing during 9MFY16; FY17 revenue target set at Rs3.6trn for FBR, compared to a target of Rs3.1trn in FY16 and the government looking at a massive increase in fixed duties for imported cars in the upcoming budget. Foreign exchange reserves during the week reached record high at $21.3bn.

OUTLOOK: Investors awaited the SBP’s latest monetary policy announcement a day after the close of the market for week-end. Since the consensus expectations remained status quo, it was set aside by the investors as a non-event.

“While the equity bourse may hover at current levels next week with major volumes generated by second and third-tier stocks, as we approach the June14 MSCI announcement, stocks under review may remain under limelight”, predicted analysts at AHL Securities. The KSE-100 is currently trading at price-to-earnings (p/e) multiple of 9.1 times on 2016 earnings against Asia-Pacific regional average of 14 times while offering dividend yield at 5.2pc against 2.5 offered by the region.

Published in Dawn, May 22nd, 2016