KARACHI: Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index gained 271 points, or 0.63 per cent, in the outgoing week to close at 43,271 points.

But for all that, it was quite a roller-coaster ride for most investors during the week. The index started on a positive note as news of decrease in gas prices for industrial and fertiliser sectors sparked investor interest in related stocks. But by mid-week, investors were gripped with panic due to abrupt rupee depreciation in the open market and concerns over accelerated foreign selling.

The unexpected event of cut in production by the Organisation of Petroleum Exporting Countries (Opec) that tossed the international crude oil prices up by 10pc helped to calm down the stock market, which saw sustained buying in the heavyweight exploration and production (E&P) sector.

Average daily volume for the outgoing week declined 2pc week-on-week to 464 million shares while average daily value was down 2pc to Rs15bn. “On a month-on-month basis, the benchmark index yielded a strong return of 6.8pc in November, the highest monthly return posted in 2016,” dealers at BMA Capital Management said.

November sees strongest returns this year

Consistent with previous several weeks, foreign selling remained a major concern during the week with foreign portfolio outflow at a hefty $33.6m, which raised the foreign sell-off during November at $125.7m.

During the week, banks, oil and gas exploration and textile sectors saw major overseas selling of $8.4m, $8m and $5.6m, respectively, while buying of $2.2m was seen in oil and gas marketing shares. The foreign selling spree was absorbed by local mutual funds ($19.3m) and individuals ($11.3m).

Topline Securities observed that the top three gainers over the outgoing week were tobacco, food and personal care and oil and gas exploration sectors, which were up 9pc, 1.1pc and 0.9pc, respectively. On the flip side, the top three losers were oil and gas marketing, commercial banks and cements, which declined by 1.9pc, 0.9pc and 0.5pc, respectively.

“Relating to contribution by stocks, the KSE-100 index upside during the week came from Engro Corporation which rose 4.26pc, Searle Company Ltd 5.28pc, Hub Power Company 2.02pc, IGI Insurance 15.07pc and Millat Tractors 6.62pc, which collectively added 178 points, according to Intermarket Securities.

Analysts at Spectrum Securities stated that on the first trading day in the outgoing week, investors were cautious where the Engro family supported the market. However, the local bourse plunged 438 points in the next two days, which was mainly attributable to Panama Papers hearing case and foreign selling in the banking sector.

Index then regained its momentum on the back of Opec and Russian agreement over oil production cut by 1.2m barrels per day. As a result, the index gained 285 points in a single day (Thursday), where 70pc contribution came from the E&P sector.

Key news flows during the week was: inflation eased to 3.81pc in November; the finance minister announced increase in petrol and diesel prices by Rs2 and Rs2.70 a litre, respectively; the government has so far released Rs248.1bn for various development projects under public sector development programme (PSDP) 2016-17 as against the total allocation of Rs800bn; and reports that the PSX would open bids for acquisition of 40pc stake in the bourse on Monday (Dec 5). Foreign strategic investors and local institutions have submitted the bids.

According to AKD Securities, key gainers at the bourse during the week were: Engro Polymer and Chemicals Ltd which increased 14.9pc wee-on-week, Millat Tractors 6.6pc, ICI Pakistan 4.97pc and Engro Corporation 4.3pc, whereas laggards were Nishat Chunian which fell 6pc, Nishat Mills 5.9pc and Honda Atlas Cars 2.9pc.

OUTLOOK: With rally in oil prices after the Opec meeting seemingly exhausted owing to uncertainty on global demand outlook and looming threat of reversal in US shale production, market may remain range-bound in the near term. Continuation of foreign selling will remain a major downside risk.

“However, we downplay any major concerns on stability of rupee-dollar rates owing to robust foreign exchange reserves (import cover at four months) and expected inflow of foreign direct investment/loan financing under the China-Pakistan Economic Corridor,” analysts at BMA Capital Management said.

Published in Dawn December 4th, 2016