KARACHI: In the outgoing week, the stock market posted gains in all five sessions, which was a positive event seen after 26 weeks. The KSE-100 index surged by 741 points (2.2 per cent) and closed at 34,008, bolting past the psychological barrier of 34,000.

The improved investor sentiments were based on opening up the lockdown by the government to resume business activity. Other reasons for the positive outlook were the MSCI semi-annual review that retained Pakistan in the emerging market index and the uptick in cement and steel sectors on the PTI’s announcement to begin construction of Diamer-Bhasha Dam; recovery in international oil prices that gave some life to the exploration and production stocks and the agriculture package of Rs50bn which generated buying in fertiliser scrips.

Pharmaceutical sector witnessed heightened activity after Ferozsons — which gained 44pc during the week — announced agreement between its subsidiary and Gilead for manufacturing experimental drug Remdesivir for treatment of COVID19.

Among other events, helpful contribution by the International Monetary Fund for Pakistan to grapple with the economic shocks caused by the pandemic was encouraging while the action by Moody’s to place the country’s sovereign rating under review did not dampen sentiments.

Foreigners offloaded stocks worth of $10.91 million compared to a net selling of $17.82m the earlier week. Major foreign sell-off was witnessed in commercial banks of equity worth $2.89m and power generation and distribution sector in the sum of $2.40m.

On the local front, buying was reported by individuals in the sum of $5.56m, followed by mutual funds $4.97m. Average volume stood at 219m shares, up 15pc, over the earlier week while the mean value traded rose 13pc to $40.3m.

Contribution to the upside was led by oil and gas exploration companies, higher by 192 points, cement 177 points, fertiliser 148 points, food and personal care products 61 points, and technology and communication 57 points.

Scrip-wise major gainers were Fauji Fertiliser, up 74 points, Mari Petroleum 73 points, Lucky Cement 66 points, Nestle 59 points, and Oil and Gas Development Company 56 points. Whereas key losers were Bank Al Habib, down 40 points, Sui Northern Gas Pipelines 35 points, Allied Bank 20 points, Indus Motor Company 17 points and Pakistan Tobacco 14 points.

In the week ahead, the market is likely to remain range-bound due to the final days of Ramazan when people concentrate more on seeking the blessings of the almighty, leaving aside other affairs. With the Eid holidays in sight, weak investors may opt for profit-taking.

The SBP monetary policy announced after close of trading on Friday was in line with market consensus expectations of a 100bps interest rate cut, which is unlikely to spur activity on that account. Anticipations on steps likely to be taken in the upcoming federal budget could set the direction too.

But everything would be subject to the state of coronavirus infection numbers and the extent of end to the lockdown that could depress or revive business and industrial activity.

Published in Dawn, May 17th, 2020