KARACHI: For the third consecutive week, the stock market maintained the positive momentum. The benchmark KSE-100 index was up 2 per cent week-on-week and closed with gain of 630 points at 32,111.

It took the three-week cumulative return to 8pc. On the economic front, the week kicked off on a positive note with Monetary Policy Committee (MPC) announcement of status quo on key interest rate at 13.25pc.

Decline in current account deficit (CAD) by 55pc for 2MFY20, and increase in forex reserves by $146m on a weekly basis also provided relief to the investors. The State Bank of Pakistan conducted an auction on Wednesday in which it picked up Rs274bn for 3, 5 and 10 years as cut-off yields declined across the board which was one of the major reasons for sharp index upturn.

Moreover, the visiting IMF delegation expressed satisfaction over the reform process and agreed targets. On the political front, Prime Minister Imran Khan PM is expected to meet President Trump ahead of the United Nations’ General Assembly meeting in New York.

The Securities and Exchange Policy Board (SEPB) on Wednesday approved amendments to the Exchange Traded Funds Regulations, which have been revamped to add flexibility for fund managers to appoint separate intermediaries for performing the functions of market maker and authorised participant.

Foreign buying was witnessed during the week amounting to $7.75m compared to net buying of $1.01m week-over-week. The inflow was seen in commercial banks ($3.6m) and cement ($2m). On the domestic front, major selling was seen in insurance companies $9m and mutual funds $6.8m. Among local participants, individuals were major buyers of stocks worth $6.72m.

Average volume settled at 123m shares, down 5pc while average value traded clocked in at $33m down by 13pc. Volume leaders during the week were MLCF (43.54m shares), PAEL (40.97m) LOTCHEM (33.54m), KE (31.88m) and WTL (28.08m).

Going forward market pundits expect the positive momentum to continue next week on the back of improving macroeconomic situation. Reduction in PIB yields has once again made equities an attractive asset class. The rejuvenation of foreign interest in the market is also a major factor that should continue to fuel the positivity.

Commencement of futures rollover week may exert pressure on the market going forward. PM Khan’s visit to Saudi Arabia followed by scheduled meeting with President Trump in US may turn out to be a vital factor in Kashmir issue and FATF. Earning announcements are expected over the coming week from some heavyweights including PSO and PPL.

Published in Dawn, September 22nd, 2019