KARACHI: Recovery set in during the outgoing week as the KSE-100 index rebounded 972 points or two per cent to finish at 49,527.

But the gains were nowhere near the free fall of 4,082 points or 7.75pc in the preceding week when expectations of foreign inflows from MSCI Emerging Market passive funds failed to materialise.

Much of the gains in the outgoing week were realised in the first half of the week when investors went on a buying spree after the massive sell-off earlier on the eve of the MSCI reclassification opened up valuations.

Major contribution to the upside during the week came from the cement sector, which added 215 points to the index as the highest-ever Public Sector Development Programme allocation under the federal budget, incentives for construction proposed in provincial budgets and a price hike of Rs35 per bag supported domestic interest in the sector.

Lucky Cement with addition of 104 points and Fauji Cement with contribution of 32 points led the sector gainers.

Commercial banks recovered 215 points as they had borne the brunt of MSCI selling in the earlier week. United Bank was the sector leader with gains of 100 points.

The automobile sector chipped in 116 points due to a spectrum of triggers, such as the announcement of the Punjab Orange Cab scheme, tractor subsidy of Rs2 billion and delay in the reduction of the duty on imported vehicles. Honda Cars, Indus Motors, Pak Suzuki and Millat Tractors together contributed 151 points to the index.

Pharmaceuticals climbed 3pc on a week-on-week basis.

The oil and gas exploration sector dragged down the index by 2pc week-on-week on the back of a decline in international oil prices as Saudi Arabia and other Arab states severed ties with Qatar.

Investors were encouraged by the respite in foreign selling as foreigners turned net buyers of $14 million worth of stocks against net outflows of $150m witnessed in the preceding week. Foreign interest was profound in fertiliser with net buying of $7m and banks with net purchases of $6m. Among local participants, individuals and banks resorted to profit-taking through the sale of $20m and $7m worth of equity, respectively.

The average daily trading volume declined 19pc over the earlier week to 239m shares.

Engro Polymer and Chemicals with 69m shares, Dost Steels 59m shares, Dewan Farooque Spinning Mills 54m shares, Azgard Nine 48m shares and Aisha Steel Mills 37m shares were volume leaders. The average traded value slipped 53pc to $11.7bn.

Scrip-wise, major contribution to the upside came from Lucky Cement, which gained 4.89pc, United Bank 4.57pc, Engro Corporation 2.64pc, Mari Petroleum Company 6.17pc and Bank Al Habib 4.84pc, adding 341 points.

The laggards for the week were Engro Foods, which went down 3.31pc, Nishat Mills 3.07pc, Nishat Chunian 2.64pc, Oil and Gas Development Company 1.81pc and Sui Northern Gas Pipelines 1.10pc.

News flow during the week included: Pakistan to continue LNG imports from Qatar, decrease in foreign exchange reserves by 5.8pc to $20.5bn, World Bank projecting growth at 5.5pc for 2017-18 on the back of agriculture and China-Pakistan Economic Corridor, Sindh government allocating a Rs2bn subsidy for tractor purchases and Independent Power Producers sending an SOS to the government to clear the mounting overdue bills.

OUTLOOK: Pundits believe that consolidation can be seen in the week ahead. New margin financing product is set to be launched on June 12, which can help generate activity, albeit short trade timings in Ramazan may continue to keep investors to the sidelines.

Production figures to be announced by automobile manufacturers may trigger interest in that sector. But many pundits think the week can see volatility due to a rise in global oil prices and temperatures heating up on the domestic political front as the investigation into the Panama Papers case picks up pace.

Published in Dawn, June 11th, 2017