KARACHI: Bulls staged a comeback at the stock market in the outgoing week to carry the KSE-100 index up by 727 points (1.8 per cent) to close at 40,798.

Bears were driven away after a three-week rampage that saw the index bleed by 2,459 points or 5pc.

The market commenced the outgoing week on a dismal note shedding 1,000 points, as investor sentiments received an early jolt over the higher-than-expected CPI number of 9.4pc for September. Other reasons for a bearish beginning was the growing noise on the political front, fears of a resurgence of Covid-19 cases; continuous sell-off by weak leveraged investors to meet the margin calls and heavy sell-off by mutual funds to meet redemption calls from nervous unit holders.

But the market was soon able to shed the gloom as international oil prices took a flight and global equity markets showed signs of recovery.

On the local front, the cement industry came up with all-time high cement dispatch numbers of 5. 21 million tonnes for September.

The State Bank of Pakistan (SBP) directives to banks to develop time-bound ‘action plan’ with quarterly sub-targets for financing to housing and construction sector, gave fillip to the cement sector. All of that helped market close in the green during four out of five sessions in the outgoing week.

Foreign investors continued to offload stocks. Out of the total outflow of $7.4m, overseas investors selling was seen in commercial banks in the sum of $2.48m and E&Ps $2.15m. On the local front, major buying was undertaken by insurance companies in the sum of $5.52m and banks $4.69m. On the other hand, mutual funds were net sellers to meet redemption while individuals, mainly the leveraged players sold stocks to meet margin calls.

Average daily volumes stood at 417m shares (up by 7pc week-on-week) while average daily value traded settled at $81m (down by 2pc WoW).

Top performing sectors were refineries, up 3.8pc; cements 4.3pc; Oil marketing companies 3.3pc whereas chemical sector witnessed a loss of 3.5pc and power sector declined 2pc. The notification issued by the SBP to transfer federal government related bank deposits to the central bank exerted pressure on the banking sector stocks, mainly the National Bank of Pakistan and the Bank of Punjab.

Going forward, brokers and analyst are expecting another bullish week on the back of heavy investor participation; stable interest rates and some promising upcoming quarterly results for cyclicals cement and steel and the core sector companies in exploration and production; oil marketing companies; technology and fast-moving consumer goods.

Although the Coronavirus daily monitors have continued to remain at the edge of their seats, the infection ratio continues to remain low. On the flip side, investor interest in high risk equities can be dented due to the growing political uncertainty as the opposition holds a power show in Gujranwala on October 16.

Moreover, higher current account deficit expected for September 20, the spiralling inflation in part due to raise in gas and electricity tariff and the lingering concern over the Financial Action Task Force meeting results due by the end of the month could prompt weak holders, mutual funds and some institutional investors to take profit; reduce their positions and prefer to hold on to cash until the dust settles on various fronts.

Published in Dawn, October 11th, 2020