Bulls ruled the roost at the Karachi stock exchange in the week ended Friday. The KSE-100 index took a giant leap of 336 points to close at its all-time high at 16,574 points.

The KSE-100 index continued to outperform major world indices. For the current calendar year up to Friday, Pakistan stock markets had already provided a fabulous return of 46 per cent, far ahead of the second best global performer Thailand with a return of 29 per cent.

Encouraged by the market’s growth, foreign fund managers allocated $6.7 million in the Pakistani stocks during the week, up from inflow of $5.7 million the previous week.

Market capitalization of KSE amounted to Rs4.2 trillion, equivalent to $43 billion. During the outgoing week, average daily trading volume stood at 292 million shares, showing an increase of 16 per cent over the earlier week’s average of 253 million shares.

Average daily value traded showed strong growth of 37 per cent to Rs6.3 billion from Rs4.61 billion the previous week.

Most analysts said that investor sentiments were at a high pitch on anticipation of further easing in the upcoming Monetary Policy. Furqan Ayub at JS Global observed that while second and third tier stocks were in the spotlight, key sectors like cement and textiles also came in limelight.

Investors expected cement prices to rise, while textile companies were thought to benefit from a stronger dollar, which raised hopes of robust earnings and better margins for the textile sector.

Traders noted that on the macro front, foreign exchange reserves fell on account of IMF loan repayments.

Other key highlights for the week included Unilever’s decision to delist from the bourses and Lahore High Court’s order to the Government to begin construction of Kalabagh Dam.

Other news included Pakistan’s banking spreads standing at their lowest point since 2005; ministry of industries suggesting gradual opening up of trade with India; Pak-US Economic Dialogue scheduled from Nov 29th to Dec 5th; rise in cement prices by Rs5 in the North and a halt to cement exports to India via railway.

Equity dealer Samar Iqbal at Topline Securities said that the local bourses had seen a bull run in anticipation of lower inflation for the month of November and further monetary easing. The trader said that the buyback announcement from Unilever management triggered interest in the stock as investors anticipated the deal to be struck at a higher price. While investor interest was also seen in other fast moving consumer goods (FMCG) items like Nestle and Efoods, renewed interest also emerged in the banking sector as the year-end approaches.

Major gainers during the week were Grays of Cambridge; Bata (Pakistan); KESC and Pakistan International Container Terminal, Other top performers included Efoods, up by 12 per cent over last week; UBL higher by 11.5 per cent; Honda Cars gaining 7.6 per cent and Sui Northern Gas Pipelines up by 6.4 per cent. The biggest losers included Pak Cables; Pace (Pakistan); Kohinoor Energy; Allied Rental Modaraba and Pak Suzuki Motor Company. Stocks losing out during the week also included Al-Ghazi Tractors; Indus Motors and Nishat Chunian.

The analysts at AKD research identified Top-5 volume leaders for the week as Fauji Cement; KESC; Jah.Sidd.Co; D.G.Khan Cement and Maple Leaf Cement.

Outlook for the Future

Analysts said that investors would keep a close watch on inflation numbers next week and that a low reading should further strengthen expectations of monetary easing in the upcoming SBP’s Monetary Policy.

Analysts at KASB Securities observed that while the market’s focus during next week would be on inflation data which may hint at the quantum of Discount rate cut, any positive outcome from Pak-US dialogue and subsequent release of CSF Funds could bode well for the sentiments. Moreover, decision on International Clearing House could be a key determinant of the fate for telecoms.

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