KARACHI: The stock market managed to shrug off the political threats and ride out the challenges of a roll-over week to retrace losses in the last two days of the outgoing week. The benchmark KSE-100 index gained 427.61 points (1.08 per cent) to close the week at 39,927 points.

Things seemed to pick up slightly on the foreign front as well as overseas investors turned net buyers of $1.9 million worth shares during the week against net sale of $18.38m the previous week. Oil and gas exploration sector witnessed a net inflow of $7.3m while chemical sector saw a net outflow of $10.3m.

Average daily volumes at the market for the week witnessed an improvement of 0.6pc, clocking in at 232m shares. On the other hand, average daily values fell 22pc to Rs10.1bn over the earlier week.

Positivity prevailed at PSX with new triggers surfacing to unlock values of shares across the board. “The market rallied strongly towards the end of the week, given an oversold condition, especially in cement sector,” opined dealers at KASB Securities. The cement sector also turned strong with robust despatches during the past month aiding sector-wide price performance.

Banks displayed exuberance with NBP unveiling results above expectations while the completion of due diligence of NIB Bank by MCB acted as a catalyst. “Much of the trading activity was centred on low market capitalisation sectors such as, gas utilities, leisure goods and beverages,” said analyst Faizan Ahmed at JS Global.

In the power generation and distribution sectors Hubco, K-Electric, SNGP and SSGC caught investors’ fancy.

On the other hand, Fertiliser and Insurance sectors were hammered by 3.3pc, and 1.3pc, respectively.

“Major contribution to KSE-100 index upside came from HBL rose 2.35pc, Hubco 3.14pc, Murree Brewery 27.63pc, MCB 2.51pc and NBP 5.12pc adding up to 242 points. On the flip side PPL lost 1.92pc, HMB 7.42pc and Engro 0.94pc taking away 64 points,” calculated analysts at Intermarket Securities.

Outlook: Financial results of most cement companies are yet to be unveiled, which could keep the market upbeat. Other than that most heavyweight corporates have already declared their profits and dividend payouts, winding down the earnings season, which also represents the possibility of market consolidating at current index levels, close to 40,000 points.

“While volatility in oil prices in anticipation of the informal oil producers meeting in the upcoming month shall dictate the trajectory of the E&P scrips, overall we remain upbeat on cements and fertiliser sectors as key fundamentals remain intact” stated analysts at brokerage Arif Habib Ltd.

The KSE-100 is currently trading at price-to-earnings (p/e) ratio of 9.5 times, the 2016 earnings against Asia Pacific regional average of 15.2 times while offering 5.1pc dividend yield versus 2.4pc offered by the region.

Published in Dawn, August 28th, 2016