KARACHI: Stocks completed five-week winning streak on Friday with the KSE-100 index notching gains of 372 points (0.84 per cent) to close at 44,551.

The positive momentum has spiralled up the benchmark index by 5,905 points (15pc), almost countering the entire loss of 2017. Some cooling of political heat, net buying by foreign investors and uptrend in international oil prices helped sustain the investors’ interest in equities, though many remained cautious which saw market close with pared gains of 1pc, against 3pc growth last week.

The average daily traded volume improved significantly by 49.6pc over the earlier week to 275.4 million shares with TRG Pakistan 73.93m shares, K-Electric 73.26m, Dewan Cement 63.62m, Bank of Punjab 59.65m and Power Cement 51.41m leading.

Foreigners accumulated equity worth 12.44m in the outgoing week, witnessing a significant slowdown from net foreign purchases of $33.11m the earlier week. Overseas investors were concentrated in cements with buying of $6.2m and banking $4.6m. On the local side, selling of equities was observed from companies valued at $13.9m, followed by banks/DFIs $13.6m while individuals bought stocks worth $24.8m.

On a sector wise basis, cement up 7pc, pharmaceutical 6pc, and electricity 3pc were key outperformers adding 424 points while tobacco was down 1pc. Exploration and production and fertilisers together wiped off 309 points from the index.

Major contribution to upside came from Lucky Cement, increasing by 6.23pc, D. G. Khan Cement 11.06pc, Hub Power 3.03pc, Pakistan International Bulk Terminal 13.88pc and Packages Ltd 9.96pc totaling 295 points. On the flip side, United Bank, down 5.01pc, Pakistan Oilfields 7.88pc and Habib Bank 2.51pc took away 297 points.

Key news flows impacting the market during the week were: Fitch Ratings revised the Pakistan’s outlook from stable to negative, current account deficit widened 59pc to $7.41bn in first half of fiscal year 2018, imports of used cars jumped 70pc and first IPO in pipeline, Matco, for 2018 completed book-building. Other developments were Pakistan’s foreign exchange reserves falling to $19.640 billion attributable to external debt servicing, fertiliser off-take during 2017, up 8pc year-on-year to 9.87m tonnes and linkage of pharmaceutical prices with inflation.

Outlook: Many market strategists cautioned that the backtrack of the KSE-100 index in the last two days of the previous week due to foreign selling, though partly a result of roll-over week, could extend into the upcoming week. Other negatives were listed as policy rate hike by 25bps to 6.0pc in the monetary policy announced by State Bank of Pakistan on Friday. Some espoused the view that this raise would lift investors’ renewed optimism, driven by index heavy banking sector which is likely to benefit from the move. The market was thought to take direction from the upcoming quarterly and yearly results as any positive earnings surprise from key sectors could act as catalyst for the market.

Published in Dawn, January 28th, 2018