KARACHI: For the seventh consecutive week, the stock market remained in control of the bulls who charged across the board. Bullish fervour came to a head on the last trading day when the KSE-100 index tore down the psychological barrier of 41,000 –level in intraday trade.

It retraced few steps to close at its peak since February at 40,917, higher by 184 points (0.50 per cent). The feat was accomplished with the index returning highest gains of 21.6pc generated in seven successive weeks, which last happened 10 years ago in September 2009.

Late reaction of the market to falling yields on Pakistan Investment Bonds (PIBs) and growth in foreign exchange reserves of central bank to $9.23 billion from $9.11bn, worker remittances up 9.4pc at $1.8bn, trade deficit narrowed by 33pc during 5MFY20 and country saw $1.3bn inflow from the Asian Development Bank for budgetary support and addressing power sector reforms. All of those provided the market a reason to rise.

In the bond auction held on Wednesday, yields on three, five and 10-year PIBs came down by 5bps, 26bps and 35bps, respectively with the longest tenor’s yield falling below 11pc. Investors’ euphoria on Friday was underscored by reports that Pakistan had offered Russia to participate in the divestment of government’s shareholding in the country’s largest state-run oil and gas explorers — OGDC and PPL — and become a strategic partner by acquiring shares. It sent the price of both these stocks to hit or end close to the upper circuits. That snowballed into intense buying in other blue chips.

Foreign selling was witnessed, clocking in at $9.1 million compared to a net buy of $1.1m the preceding week. Selling was witnessed in E&P at $5.4m and commercial banks $3.5m. On the domestic front, major buying was reported by individuals at $7.4m and mutual funds $7.6m. Average daily volume settled at 276m shares, down 41pc while mean traded value reached $67m, lower by 36pc.

Sector-wise, oil and gas exploration added 273 points, chemical 54 points, food and personal care 47, fertiliser 42 and tobacco 38. Among scrips, lead gainers were OGDC, higher by 5.47pc, PPL 4.55pc, Mari Petroleum 6.99pc, Nestle Pakistan 11.80pc and Pakistan Oilfields 2.91pc.

Going forward, pundits expect the market to spiral upwards given the investor confidence in the economic recovery in the face of Improvement on the external front together with stability in the rupee.

Meanwhile inflationary readings are set to touch peak in January 2020 with an imminent interest rate cut expected to follow. While the individuals have led the rally, support from mutual funds and foreign buying is inevitable for an impetus to northward journey.

Published in Dawn, December 15th, 2019