KARACHI: For the second consecutive week, stock market displayed a spectacular performance with the KSE-100 index recording gains of 884 points (2.1 per cent) and closing seen above 43,000 for the first time in 17 months, at 43,207.

But the sailing was not all too smooth as the world held its breath watching with growing concerns the US-Iran hostilities that were feared to result in a full-blown war with the potential to engulf the whole region in flames.

Two negative sessions in the week wiped out much of the gains but were recouped in the last two days as President Trump announced that US would not retaliate over the Iran missile attack but impose harsh economic sanctions on the country. It boosted investor confidence, resulting in a bounce back in the equity markets, and correction in commodity, gold and other fixed income securities.

On the economic side, the increase in State Bank foreign exchange reserves to $11.50 billion, from $11.48bn and the declining 10-year Pakistan Investment Bond yields by nine basis points to 10.9pc added to the overall improvement and gave boost to investors’ appetite for stocks.

Foreigners turned net buyers in the sum of $7 million

compared to a net sale of $7.3m the earlier week. Inflow was witnessed in fertiliser at $5.9m and exploration and production $1.8m. On the domestic front, mutual funds sold stocks worth $5.9m while individuals who had accumulated stocks at lower levels took profit with sale of shares valued at $4m.

Average volume was up 8pc at 303m while the mean value traded clocked in at $78m, higher by 13pc. Sector-wise positive contributions came from commercial banks, higher by 403 points, oil and gas exploration companies 178 points, fertiliser 111 points, power generation 86 points, and cement 77 points.

On the flip side, automobile assemblers fared badly with loss of 44 points. Scrip-wise positive contributions came from Hub Power, increasing by 105 points, Habib Bank 95 points, Pakistan Petroleum 88 points, Lucky Cement 87 points and United Bank 73 points.

In the upcoming weeks, the tone of market would be set by the earnings result season where most seasoned players are predicting banking, exploration and production, power and textile to post bright bottom lines while cyclicals including cement and steel could be disappointing.

As the market broke through its key resistance levels in the outgoing week, analysts believe the upwards trajectory may continue next week. The stability in the rupee, shrinking current account deficit, inflows in T-bills, PIBs all bode well for the equity market.

Published in Dawn, January 12th, 2020