KARACHI: The stock market remained optimistic in the outgoing week, mainly on the hopes of a favourable budget which was to be announced after trading hours on Friday. The KSE-100 index gained 261 points (0.8 per cent) and closed at 34,611. The gains would have been higher but for a major fall of 1.5pc on the last trading day.

It started on a positive note as the market extended the preceding week’s rally. Most index-heavy sectors led the bourse to the North. Exploration and production made massive gains in the initial days underpinned by a surge of 5pc in international oil prices. Expectation of reduction in the Federal Excise Duty on cement rejuvenated investors’ interest in the sector, which also benefited from the Government’s focus on the construction industry to revive cyclicals and save jobs. All of that encouraged investors to accumulate cement shares which remained green across the board for most days. Besides incentives to the cyclical sectors, investors also bet on higher allocation of Public Sector Development Programme.

Foreigners were sellers of stocks worth $7.73 million, which was considerably less than their sell-off the preceding week amounting to $15.27m. Major outflow was from commercial Banks at $3.27m and all other sectors $1.94m. On the local front, buying was mainly by individuals at $5.96m while mutual funds picked up equities of $2.11m.

Investor participation jumped with the average daily volume up by 44pc to 226m shares and traded value mounting 26pc to $50m. News flow indicated that Covid-19 had inflicted a loss of Rs3 trillion; total public debt surged to 88pc of GDP; foreign exchange reserves fell to $16.705bn; and the Asian Development Bank granted approval for loan of $500m to Pakistan to fight the pandemic.

According to Arif Habib Ltd, sector-wise contribution to the upside was led by commercial banks, increasing by 204 points, cement 92 points, textile composite 64 points, pharmaceuticals 56 points, and fertiliser 55 points. Scrip-wise major gainers were United Bank, up 63 points, Lucky Cement 54 points, Meezan Bank 43 points, Bank Alfalah 33 points, and Fauji Fertiliser Company 31 points while losses were suffered by Hub Power, down 67 points, Oil and Gas Development Company 61 points, Pakistan Petroleum 49 points, EFU General 20 points and Mari Petroleum 13 points.

Going forward, market gurus thought that the direction would be set by the federal budget and how investors look at the few incentives provided despite the mounting cases of Covid-19 in the country. Although Prime Minister Imran Khan is adamant in avoiding the strict lockdown, an unmanageable breakout could make him change his mind.

Published in Dawn, June 14th, 2020