KARACHI: Stocks recovered in the outgoing week with the bulls chasing bears out of the market and pushing the KSE-100 index up by 844 points (2.11 per cent) to settle at 40,732.

It was a major relief for stockholders who had to endure a bloodbath the week earlier when the KSE-100 index had broken two barriers of 41,000 and 40,000 and hit a low at 39,888 points.

The market opened in the outgoing week in deep red with a heavy loss of 766 points on Monday as investors feared a prolonged downside as the rising new cases of Covid-19 fueled fears of the second wave of pandemic in the country.

However, the negative performance was short lived as the index bounced back on Tuesday in a spectacular rally of 1,369 points (highest one-day increase since April 17). But the government’s commitment to avoid lock downs provided some relief to investors who worried over the impact on economy and corporate profitability when the wheels of industry starts to turn slower or are brought to a halt.

The big event that caught the investor interest was the US elections and its outcome though major participants proclaimed that it would have little bearing on the local market.

During the outgoing week, the international equities and commodities market were on a roller coaster ride with some of the impact spilling over into the PSX. The impact of the price of crude in the international market had a bearing on the energy stocks mainly those on the exploration & production sector which were hammered by the slump in oil prices by 2pc over the last two trading days.

The strengthening of the rupee against the dollar was a major positive for the economy. It coincided with the lower than expected inflation numbers at 8.9pc.

The decision by the Economic Coordination Committee (ECC) to reduce the industrial power tariff by 19pc to 12.96 per unit and the constitution of a committee to work out solutions to grapple with the circular debt in the power sector improved investor sentiments.

Foreigners offloaded stocks worth of $5.50 million compared to a net sell of $21.34m a week ago. Major outflows were witnessed in commercial banks ($3.46m) and E&P ($1.86m). The selling was mainly absorbed by individuals who bought shares worth $5.37m, followed by insurance companies $3.63m.

Investor participation fell mainly in the concluding sessions of the week with average daily volumes down 18pc to 368m shares while the average daily traded value decreased 30pc to $79m.

Sector-wise, contribution to the upside was led by commercial banks, up 203 points, oil and gas exploration companies 149 points, technology and communication 97 points and cements 74 points.

Fertiliser sector also remained in the limelight as the Supreme Court extended the recovery timeline of the Gas Infrastructure Development Cess payable from 36 to 60 months. Scrip-wise, major gainers were Pakistan Oilfields Ltd, up 90 points, TRG Pakistan 83 points, Meezan Bank Ltd 61 points, Bank Al Falah Ltd 35 points, and Habib Metropolitan Bank 33 points. Scrip-wise, major losers were Habib Bank Ltd, down 38 points, Fauji Fertiliser Company Ltd 14 points Pakistan Tobacco Ltd 13 points, Murree Brewery six points and Attock Petroleum Ltd six points.

Going forward, strategists expect the market to perform well on the premise of fresh flow of funds in the market by local and foreign funds as the economy shows signs of improvement with further appreciation of the rupee against the dollar; reduction in trade deficit, robust dispatches reported by cyclical sectors. On the flip side, the growing cases of Covid-19 could push government to return to lock downs. It has also to be seen how the international stocks and commodities markets move with their influence on global oil prices as the outcome of the US elections comes to the fore.

Published in Dawn, November 8th, 2020