KARACHI: With opposition protests ahead, bulls started on a cautious note in the outgoing week but they started to charge relentlessly as the worst fears of a political mayhem did not materialise.

The KSE-100 index bounced back to cross the 44,000 barrier after four months. It settled at 44,179 recording gains of 1,244 points (2.9 per cent) for the week. The spectacular rally was an extension of the preceding week when the benchmark had snapped up 410 points (0.98pc).

Since Jan 1, the index has made stellar gains of 3,707 points (9.2pc) with 11 out of 15 trading sessions closing in deep green. Aggressive foreign buying was at the heart of the relentless bull run. In the last 15 trading days, foreign fund managers have cherry picked mainly blue-chips worth $82.5 million, putting the April 2014 heavy foreign portfolio in the shade. “Foreign buying (FIPI) is gaining traction post Pak Rupee devaluation”, say analysts at Topline Securities.

The thaw on the political front, supported by the statement by Prime Minister Shahid Khaqan Abbasi that the premature dissolution of any provincial assembly would not affect the Senate election, gave confidence to investors who were inclined to trade.

The PM’s announcement on Wednesday to offer an amnesty scheme for Pakistanis to declare their foreign assets also helped boost investors’ sentiments. Commercial banks and extraction and production sectors led the rally in the outgoing week, the former on the expectation of interest rate hike and the latter on the strong international oil prices with WTI at a high of $64 a barrel.

Volume decreased 30pc over the previous week to 184m shares while the traded value declined 28pc to $79.7m. Habib Bank, up 6pc, Engro Corporation 7pc, Lucky Cement 7pc, Hub Power 5pc & D.G. Khan Cement 9pc added 531 points to the index.

Pakistan International Airlines remained the most attractive scrip during the whole week and gained Rs0.21 (4pc) in its share value due to the news of the government trying to privatize PIA before elections. The laggards for the week included National Refinery, down 8pc, Attock Refinery 5pc, J. D. W Sugar 8pc, Pakistan Tobacco 6pc & Packages Ltd 6pc scrapped 47 points. On the sector front, major gainers were banks, cement, fertiliser and auto contributing 335, 260, 157 and 112 points respectively.

Major news during the week were: foreign exchange reserves slipped below $20 billion; foreign direct investment (FDI) declined by 3pc in December 2018 despite growing inflows from China; current account deficit (CAD) during December 2017 stood at $1.1bn against $1.4bn last month; production of all major crops increased, while LSM clocked in a nine-year high growth rate; exports recorded a broad-based recovery after three years of decline, FDI inflows posted a nine-year high level and FBR achieved the highest tax collection during the last five years.

OUTLOOK: With the earnings season ahead and expectations of good payouts, much of the market believed that the bullish momentum could continue, with all eyes set on FIPI. Blue chips remained most favourable in selected sectors for medium term. Yet many analysts remained on the side of caution believing that the market was still exposed to political volatility. Market watchers also said that CAD data would be closely tracked by the market as investors would look for clues towards impact of rupee depreciation. Moreover, monetary policy statement (MPS) is also expected to be announced by the end of this month which could further impact some heavyweight sectors.

Published in Dawn, January 21st, 2018