KARACHI: The stock market remained bullish in the outgoing four-session week with the KSE-100 index posting gains of 1,305 points (3.8 per cent) to close at 34,112. It also culminated in providing one of the best monthly returns of 17pc in April.

In the outgoing week, investors were encouraged by reports of a possible massive downward revision of oil prices as the international crude was at historic lows. They expect the country to reap rich benefits from the decrease in POL prices which would ease inflation paving way for further cut in the State Bank interest rates.

It was expected to have a positive impact on a large number of sectors, dependent on oil for fuel. Other major events during the outgoing week were the Asian Development Bank’s decision to provide Pakistan with$1.7 billion to help deal with the pandemic and the finance ministry’s decision to allocate Rs600bn for Public Sector Development Programme in FY21.

The only fly in the ointment was the mounting figures of coronavirus infected people forcing authorities to extend the lock down that has cast a big blow to both the trading and manufacturing activities in the country.

Foreigners sold stocks worth $11.6 million compared to net sale of $2.5m the earlier week. Their selling was witnessed in oil and gas exploration and production at $7.7m, and fertilisers and banks $1.5m each. On the domestic front, mutual funds accumulated stocks worth $4.2mn while companies bought $3.6mn.

The sell-off by foreigners in April stood at $69m, which was absorbed by the mutual funds, insurance, local corporate and individuals in the sum of $31.62m, $20.75m, $12.36m and $10.90m, respectively.

Due to slower activity in Ramazan and a four session week, the average volume settled down 32pc at 179m shares while mean daily traded value clocked in at $49m, also lower by 32pc.

According to Arif Habib Ltd, sector-wise positive contributions came from oil and gas exploration companies at 396 points, power generation and distribution 201 points, fertilisers 158 points, cement 126 points and oil and gas marketing 78 points.

Scrip-wise, the biggest gainers were Hub Power, higher by 197 points, Oil and Gas Development Company 144 points, Pakistan Petroleum 119 points, Pakistan Oilfields 92 points and Fauji Fertiliser 79 points.

The pundits are cautiously optimistic about the direction of the market going forward. They expect the current bullish momentum to extend into the upcoming week as the softened CPI numbers of April raise hopes for a further SBP rate cut. Expectations of further easing of the lockdown would trigger business and industrial activity in the country.

Moreover, the state of demand and supply in international crude where lower inflation can help the market sustain its current momentum. The healthy financial results for the remaining big ticket companies may also guide positively. However, all that could change if the Covid-19 numbers show a substantial spike.

Published in Dawn, May 3rd, 2020