KARACHI: The bulls chased bears out of the stock market in the outgoing week with KSE-100 index recording spectacular gains in four of the five sessions. The benchmark added 1,460 points in the first four trading days but closed flat on Friday with a slight pull back by 26 points.

That left the market with net gains of 1,434 points (3.6 per cent) and closing seen at 41,056 after breaking two barriers of 40,000 and 41,000. Investors’ excitement was underpinned by expectation of the rebound in economy post Covid-19 as the current account recorded surplus in July came in at $424 million, as against deficit of $613m in the same month of 2019 and $100m in outgoing June.

Major reason for the switch over was thought to be higher remittances received during July. Moreover, foreigners’ net purchases on several trading days encouraged the investors to believe that the months of outflow was finally plugged and Pakistan had started to appear on the foreign fund managers’ radar.

Net foreign outflow stood at $0.80m against sale in the preceding week at $4m. “The market received an adrenaline rush after confidence expressed by local and global fund managers over the outlook of the bourse in electronic media,” Amreen Soorani at JS Global said.

Among domestic participants, mutual funds were major buyers. Average investor participation for the week however slipped over thin volumes on the last trading day of the week. Mean volume declined by 0.3pc, while traded value witnessed a 5pc fall.

The smooth rollover week dissipated investors’ concerns over high leverage positions. Mixed bag of financial results were unveiled which supported the index. On the last trading day, investors decided to book profit ahead of the weekend which kept the benchmark range-bound.

Heavyweight sectors that led the rally were power generation and distribution, higher by 4.8pc, oil and gas marketing companies 5pc and textile composite 6.8pc. Moreover, the news of allowance from ministry to increase drug prices also led pharmaceutical to post 4.7pc gain.

Going forward, pundits expect the market to maintain its bullish trend though given the massive rise in Index over the past several weeks, weak holders may be prompted to take profit even if to err on the side of caution.

The current account and trade surplus have put back the government in the driving seat as GDP growth estimates from foreign financial institutions continue to be revised upwards. The entire industry is seen to be limping back to normalcy following the steep decline in active Covid-19 cases. Refineries may see some activity in the upcoming week after the Ministry of Petroleum cautioned them to produce POL products on Euro-V specifications or face penalties.

Published in Dawn, August 30th, 2020