KARACHI: Stocks rallied during the outgoing week with the KSE-100 index going up by 1,386 points (3.35 per cent) to 42,787.

Strong support at the 41,000-point level provided the market with a major trigger. The index closed in the positive in four out of five sessions during the week. “The rally was likely spurred by Friday’s FTSE rebalancing,” said dealers at Topline Securities.

The brokerage stated that the addition of five stocks by the FTSE in one of its indexes didn’t move the market by much because passive funds opted to avail Friday’s post-close session to execute big orders to eliminate tracking error.

Arif Habib Ltd attributed the overall market upsurge to improved sentiments on the government’s plan to boost exports, control the widening current account deficit and keep away from the currency depreciation.

AKD Securities stated that the bourse rode on to the path carved out by international oil prices, up 4.8pc week-on-week, while incorporating the buoyant pull from Habib Bank.

Domestic equities garnered significant foreign interest during the past week. Foreigners remained net buyers of $27.7 million worth of stocks, which stood out as 11-week high.

Foreign buying was concentrated in banks that attracted $11.8m, fertilisers $6m, cements $4.2m and exploration and production $1.5m.

Among local participants, individuals resorted to profit-taking by selling equities worth $15.9m. Companies and banks sold stocks worth $7.82m and $6.74m, respectively, while brokers accumulated shares amounting to $9.7m.

The average daily volume in the week surged 16pc to 157m shares while the average traded value was up 9pc to $83m. Volume leaders included WorldCall Telecom with 60.91m shares, Azgard Nine 60.74m shares, TRG Pakistan 44.16m shares, Aisha Steel 40.11m shares and Bank of Punjab 31.92m shares.

Major index drivers during the week were Habib Bank, which added 510 points or 22pc, and Engro Corp that contributed 180 points or 8pc. In addition, performance leaders during the week included Engro Foods, which went up 9.7pc, National Bank 9.6pc and Nishat Mills 7.4pc. Laggards included Cherat Cement, which went down 4.9pc, Attock Petroleum 4.5pc, Fauji Cement 1.7pc, Gharibwal Cement 1.6pc and Pioneer Cement 1.2pc.

OUTLOOK: According to Arif Habib Ltd, the KSE-100 index is currently trading at a price-to-earnings multiple of eight times the 2018 income against the Asia Pacific regional average of 13.4 times. The dividend yield on Pakistani stocks works out at 6.2pc against 2.5pc offered by the region. The brokerage views the upcoming week with optimism.

AKD Securities observed that the by-poll result in NA-120 can affect the investor sentiments during the upcoming week. “With the FTSE rebalancing set to take effect from Monday, stock-specific movement can’t be ruled out,” it said.

Published in Dawn, September 17th, 2017