KARACHI: Stocks rallied for the second consecutive week with the KSE-100 index going up 839 points (2 per cent) to close at 42,913.

However, over the month of May, the index plunged 2,642 points (5.8pc) to record the highest monthly loss in the past seven months.

In the outgoing week, investors took heart and were comforted by the developments on the political front where all political parties reached consensus on the nomination of Retired Justice Nasirul Mulk as the caretaker prime minister.

As a result, investors on Tuesday swooped in a bid to be the first to pick up value scrips at attractive prices, which galvanised the index by 1,100 points on optimism over holding of elections as per schedule onJuly 25.

But the index conceded 236 pointson Thursdayfrom its earlier gains as a major opposition party backed out of the agreement on candidate for caretaker chief minister of Punjab.

Although investors remained on the edge of their seats wondering if the concerned parties would stick to the elections, the oath-taking by the caretaker PM and the dissolution of National Assembly on completion of five-year term were taken as glad tidings.

Investors were also relieved on thedevelopments surrounding extension of subsidies for exports, strong fertiliser off-take and release of Rs31.3 billion in sales tax refunds. Yeton the economic side, macro concerns continued to sit heavily on investors’ mind.

Sector-wise, the biggest contribution to the index came from the heavyweight commercial banks. The sector gained 2.1pc over the week, adding 163 points as domestic investors accumulated banking stocks post the interest rate hike by 50bps. Fertiliser, higher by 92 points, came in second, followed by pharmaceutical 70 points and refinery 61 points.

Attock Refinery and National Refinery were strong performers during the week, where they went around 24pc and 17pc respectively in their values amid attractive valuation and restoration of furnace oil supplies to power plants in Pakistan.On the down side, sectors that contributed negatively included transport, lower by 40 points, synthetic and rayon 1.1 points and textile weaving 0.75 points.

Stocks that remained bullish were Engro Corporation, increasing by 67 points, Searle Company 56 points, MCB Banks 48 points, Pakistan Tobacco 48 points and Pakistan State Oil 47 points. The laggards, on the othe hand, included Pakistan International Bulk Terminal, decreasing by 32 points, Maple Leaf Cement 11 points, United Bank 10 points, Pakistan Petroleum 9 points and Pakistan International Container Terminal 9 points.

Foreign selling for the week clocked in at $17.5 million compared to net sales of $26m worth equity the preceding week, concentrated majorly in banking ($11.3m) and cement ($6.6m). On the domestic scene, leading buyers were insurance companies of shares valued at $30.4m, other organisations $2.8m and broker proprietary trading $2.5m. Selling was largely executed by companies of $12.4m and banks $4.7m.

The average daily turnover stabilised at 119m shares, down 0.4pc over the preceding week. Pak Elektron with 53.9m shares was the leader, followed by TRG Pakistan 44.1m shares, Bank of Punjab 30.6m shares and Pakistan International Bulk Terminal 22.5m shares.

Going forward, investors’ focus is likely to remain on remedies to handle issues posing risks to macro stability. Furthermore, important events like FATF listing decision and OPEC meeting are expected to impact the market towards the end of the month.

Major news flow included prices of petroleum products remaining unchanged for the next week;inflation for May’18 came largely in line with expectation at 4.19pc, taking the 10MFY18 average to 3.8pc; State Bank reserves fell by $286m to $10bn, with the total reserves clocking in at $16.4bn; and Economic Coordination Committee of the Cabinet approved package of five-year tax exemptions and other incentives for former tribal region under federal and provincial administration.

Published in Dawn, June 3rd, 2018