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KARACHI: The first week of 2017 saw the KSE-100 index record gains of 1,231 points (2.5pc).

The benchmark breezed past the 49,000-point barrier to settle at an all-time high of 49,038 points.

Investors’ confidence received a boost by lower-than-expected inflation for December and a slowdown in foreign selling. The index felt a slight pullback of 123 points mid-week as nervousness took hold over the start of the Panama Papers case hearings by a new bench of the apex court.

“Even the investors’ cautiousness over an expected technical correction didn’t hamper the upward march during the week,” stated BIPL Research. AKD Securities said: “Exercising of the pricing power by cements, expectations of a turnaround in margins for steels, expectations of the textile policy and the Supreme Court’s move to re-examine beneficial owners of holding companies, helped boost a broad based rally.”

Average daily volumes for the outgoing week declined 43 per cent week-on-week to 408 million shares while the average daily value declined 44pc to Rs21 billion.

Foreign selling slowed down during the week to $2m compared with the outflow of $18m in the previous week. A major sell-off was witnessed in exploration and production, cement, food and personal care, and textile composite sectors.

Among local investors, mutual funds and non-banking financial companies (NBFC) were buyers of $12.7m and $7.2m worth of stocks, respectively. Banks and individuals were major sellers of stocks amounting to $10.9m and $6.2m, respectively.

According to Arif Habib Securities, sector-wise contribution to the index upside came from fertilisers 392 points, commercial banks 244 points, exploration and production 122 points, and oil marketing companies and cements 85 points each.

Top losers of the week were tobacco, auto parts and accessories and sugar and allied industries, which declined 7pc, 3pc and 1pc, respectively.

Fertiliser stocks rose in anticipation of a healthy off-take in the coming month. Stocks in this sector were led by gains of 131 points in Fauji Fertiliser, 118 points in Engro Corp and 61 points in Engro Fertilisers.

In the banking sector, UBL and HBL contributed 84 and 78 points to the index, respectively, on the back of attractive valuations and robust result expectations.

Stock prices in the energy sector surged as international crude prices edged up to $55 per barrel.

Key news flows included cement dispatches going up 8.65pc year-on-year to 19.81m tonnes in July-Dec, the government’s decision to keep petroleum prices unchanged for two weeks and the increase of 23pc year-on-year in POL sales for December.

According to Intermarket Securities, sharp gains in Fauji Fertiliser 9.25pc, Engro Corp 7.33pc, UBL 3.7pc, HBL 2.22pc and PSO 6.09pc contributed 473 points in the upside. According to AKD Securities, stocks that outperformed the market during the week included Amreli Steels 19.31pc, Nishat Chunian 9.15pc and Pakistan Telecommunication 8.67pc. The laggards during the week were Meezan Bank 2.31pc, Al-Ghazi Tractors 2.04pc, Engro Polymer and Chemicals 1.46pc and K-Electric 0.85pc.

Volume leaders were Dost Steels 198.4m shares, Aisha Steel Mills 114.5m shares, K-Electric 102.3m shares and Bank of Punjab 70.9m shares.

Outlook: The day-to-day hearing of the Panama Papers case appears to be the only stumbling block giving rise to uncertainty in the week ahead.

BMA Capital Management predicted that the positive trend in the foreign investors’ portfolio investment may keep the sentiments bullish.

The sectors that are expected to remain in the limelight over the next week include textiles and autos.

Most pundits say that while the market is expected to continue its journey northwards with the PSX’s inclusion in the MSCI Emerging Market Index on the horizon, investors need to be cautious and book profits to re-enter at dips.

Published in Dawn, January 8th, 2017