KARACHI: The surprise strong rally in the outgoing week where the KSE-100 index recorded gains of a staggering 2,585 points (9 per cent) over the earlier week and closed at 31,350.

This was not only the best performing week in the past 10 years in percentage terms, but was also marked for a merciless bull charge that helped to drive away the bears who held the market in tight bear hug for the past six consecutive weeks.

Average daily volume for the week stood at 174.42 million shares, up 2.5 times week-on-week, while the average trading value improved by 2 times to $37 million. Volume leaders during the week were: TRG (53.9m), MLCF (53.2m), BOP (46.6m), Unity Foods (45.6m), WorldCall Telecom (42.9m shares).

Foreigners remained net sellers during the week with FIPI standing at $4.97m with major outflow of $6.03m from the E&P sector. On the local front, individuals bought stocks worth $6.5m and brokers proprietary also picked up stocks worth $3.8m, making them the largest net buyers. Mutual funds remained net sellers of shares valued at $3.55m.

Besides the attractive valuations of equities, represented in the lowest price-to-earnings ratio in 11 years at 5 times, other positives that made the market rebound possible were ease of tensions between Pakistan and India after the US President Donald Trump initiating telephonic diplomacy; PM Khan approved extension in the tenure of Army Chief Gen Qamar Javed Bajwa for three years; current account deficit contraction by a massive 73pc in July; the expectations of SECP changing rules to support the market; and record participation in the auction of Pakistan Investment Bonds with total bids crossing Rs1 trillion.

Top leaders to the index in terms of point contribution in the week were Engro Corpora­tion (261 points), HBL (236 points), OGDCL (231 points) and Hubco (222 points).

Going forward, the market is expected to focus on the inflation reading in the next week. With major macroeconomic concerns likely to be addressed to a larger extent, market sentiment is expected to remain buoyant.

This should further be supported by ongoing result season where any earnings surprise and/or announcement of bonus/cash dividend may generate investors’ interest in select scrips.

Analysts said that geopolitical situation still remains a risk and any escalation on that front could weigh significantly on the market.

Published in Dawn, August 25th, 2019