KARACHI: For the second successive week, bulls remained in command tossing the KSE-100 index up by 1,014 points (3.4 per cent) to settle at 31,481 points.

With gains in the preceding week, the index has retrieved 6.1pc of the previous losses in the last two weeks. The outgoing week was shortened to three (instead of five) sessions due to long weekend holidays.

The week kicked off on a positive note influenced by the decline in secondary market yields after T-bills auction which raised hopes of a rate cut in the upcoming monetary policy announcement on Sept 16 (Monday).

Other triggers included reports of positive progress on FATF front, investments by pension funds in the equity market; compression of trade deficit by 38pc in the ongoing fiscal year along with the increase in foreign exchange reserves with the SBP climbing to 17-week high at $8.46bn. The Supreme Court was moved for ‘out of turn’ hearing of GIDC case which raised hopes of early resolution of the lingering issue. Further, the government reassurance on progress for meeting IMF targets on performance and structural benchmarks for 1QFY20 helped improved investor sentiments.

Average daily volume settled at 130m shares (up by 39pc week-over-week) while average value traded clocked in at $38m (up by 70pc. Based on NCCPL data, foreigners remained net sellers of stocks amounting to $1.01m. On the local’s side, mutual funds turned net buyers for the first time in FY20 on weekly basis with $5.53m purchases. Individuals were net sellers of equity worth $4.8m.

Sector-wise positive contributions to the index came from commercial banks (270 points), oil and gas exploration companies (213 points), fertilisers (196 points), power generation and distribution (95 points), and cement (86 points). Worst performer for was the food and personal care sector, down 1.8pc.

All major fertiliser stocks were gainers. FFC was up 2.1pc, Engro Fertiliser 6.3pc and Fatima 5.7pc during the week on the back of recent price hike in urea by Rs200 per bag.

Scrip-wise positive contributions were led by PPL (122 points), OGDC (89 points), Lucky Cement (84 points), UBL (75 points) and FFC (72 points).

Market pundits expect the upcoming monetary policy announcement on Sept 16 to set the market direction. Based on CPI numbers and the latest T-Bill auction pointing towards the end of the rising trend. Most analysts foresee status quo while a minority is forecasting a rate cut which would be a relief for cements, steel and select automobile and oil marketing companies.

Market is also putting faith in positive outcome of the visit of the prime minister’s visit to Saudi Arabia in the upcoming week followed by scheduled meeting with President Trump.

“In addition, the staff-level delegation of the International Monetary Fund (IMF) is expected to visit Pakistan next week to review the county’s economic performance and any development in this regard will have implications for the stock market”, an analyst said.

Published in Dawn, September 15th, 2019