KARACHI: The outgoing week brought a big surprise for the stock market as the KSE-100 index surged 3,512 points which worked out to a return of 12.5 per cent, the biggest-ever single week gain before settling at 31,621.
Investors who missed out on the rally were bewildered for rebound following the earlier three consecutive weeks of rout that had seen the index bleed to a six-year low at 27,229 in the preceding mid-week.
In the gloom and doom, the benchmark index bounced back as value hunters scooped to pick up shares at valuations so cheap that many analysts thought would not be seen in decades. The headline inflation dropped to 10.2pc in March from 12.4pc in February.
Move towards a truce between Saudi Arabia and Russia on the intervention of President Trump saw massive recovery in international oil prices which translated into three local heavyweight exploration and production (E&P) stocks, POL, OGDCL and PPL hitting their upper circuits on several trading sessions.
The week was also marked by upsurge in prices of cement stocks across the board in anticipation of the incentive package for the construction industry which the prime minister said he would announce by the weekend. Investors’ optimism flared up, with buying seen in almost all sectors across the board.
The worrisome matter continued to be relentless foreign selling which for the outgoing week amounted to $36.1 million, up from net sale of $13.7m. Foreign outflow was noted mainly in E&Ps and commercial banks On the domestic front, major buying was reported by individuals at $13m and mutual funds amounting to $10.3m.
During the week, average daily volume rose 52pc to 228m shares while the mean value traded clocked in at $46m, higher by 66pc.
Going forward, the spread of coronavirus in Pakistan during April would be the principal determining factor. The government’s incentive package for construction could help more than 40 ancillary industries jumpstart the economy and provide growth prospects for cement, steel, chemicals and allied sectors.
Companies could start to release financial figures for the first quarter, which are not likely to be too encouraging given the lockdowns.
Published in Dawn, April 5th, 2020