KARACHI: A relief rally at the stock market saw the KSE-100 index recover 793.31 points or 2.86 per cent on the last day of the trading week.

As investors’ sentiments received a boost on possible resolution of the political impasse following talks of the protesting parties with the Army chief, the index shot through the roof in a matter of minutes after opening of the market, gaining a staggering 1,063 points to touch intra-day high.

Led by the heavyweight oil and gas exploration companies, which saw all 13 listed stocks gain in varying amounts, the market witnessed across the board rebound.

On the oil and gas sector, OGDC added Rs9.84; PSO regained Rs13.35; Mari Petroleum gained Rs9.28 and ATRL was up by Rs6.05.

On the banking sector, MCB rose by Rs11.71. Due to their heavier weightage, OGDC and MCB together contributed over 250 points to the index gains.

Figures released by the National Clearing Company of Pakistan in the evening, however, took many an investor by surprise. The rally on Friday seemed to have been led almost entirely by the foreign investors who bought net $10.71m worth stocks. The foreign inflows of $6.3m went into oil and gas sector; $3.2m in banks and $1m in cements.

Local participants were all net sellers on Friday (see table). “We believe that political uncertainty still remains, where any outcome is possible so investors should still be cautious and wait for a dip to accumulate positions in high dividend yielding stocks,” contended analyst Mohammed Mobeen at JS Global.

Looking at the figures, a broker cautioned that institutions and individuals were still keeping to the sidelines as uncertainty over the political deadlock persisted. “It may be too early to say that the worst may be all but over,” said he.

Brokerage AKD Securities summed up the market performance in its weekly report, stating that the political developments were again instrumental in dictating market movements with unfolding political deadlines/deadlocks leading to heightened volatility.

Friday’s sharp upsurge post the emergence of the Army Chief as facilitator in the current political crisis enabled some losses to be recouped.

In addition to political developments, news flow influencing the market included: the Supreme Court’s decision to uphold the ruling of the Peshawar High Court deeming the imposition of Gas Infrastructure Development Charge to be illegal since its inception; Nepra giving approval to Discos to increase tariff by Re0.43 per unit for July 2014 and the receipt of $371m as part of the Coalition Support Fund towards the end of the week.

“The latter enabled the Rupee’s losses against the dollar to be curtailed to 0.6pc over the week,” analyst said.

Brokerage KASB Securi­ties commented in its weekly report that the market took a slow start to the week but the index gained momentum on the last trading day.

Average traded volume dropped 4.4pc WoW to 119m shares per day. Foreigners maintained a cautious approach until news flow of Army playing the facilitative role for resolution of current impasse, which triggered heavy inflows, dictating growth of 45pc WoW in foreign portfolio inflows to clock in at net $8.5m for the week.

Published in Dawn, August 30th, 2014