KARACHI: Stocks climbed for the fourth successive week with the KSE-100 index recording gains of 1,270 points (three per cent) at 43,740.

The outgoing week witnessed the index at its two-and-a-half year high. The entry of new investors in the market saw surge in investor participation and traded volumes. Shares across the board climbed, mainly those in the pharmaceutical, automobiles, technology & communications and banking sectors.

Positive sentiments at the market were fuelled by the surge in global markets as the launch of the Covid-19 vaccine sparked hopes among the international community that the economies may see less-than-expected slowdown.

A market watcher said that the US FDA’s finding of Moderna vaccine as ‘highly effective’ was a big step closer to the approval of another vaccine (after Pfizer/BioNTech) – a major boon for global investment sentiment.

Arif Habib Ltd analysts said that Pakistan returned the due second installment — $1 billion of the $3bn soft loan to Saudi Arabia during the week, where news reports have suggested a similar amount is expected to be received from China to prevent reduction in the State Bank of Pakistan’s foreign exchange reserves.

News reports have also suggested development on the International Monetary Fund programme front, where Prime Minister Imran Khan has reportedly agreed to increase power tariffs to meet one of the key conditions for resumption of the Extended Fund Facility.

Other important news during the week were operations of two fertiliser plants allowed by cabinet and the government granting LNG terminals’ capacity to private sector.

Large-Scale Manufacturing output grew 3.95pc during October while petroleum and oil products prices were revised upwards. Meanwhile, foreign direct investment for 5MFY21 declined by 17pc year-on-year and foreign exchange reserves decreased by 0.1pc week-on-week.

Foreign selling continued in the outgoing week clocking in at $9.4 million; the offloading done mainly by foreign corporates amounting to $8.58m. Outflow was witnessed mainly from commercial banks in the sum of $11.0m and fertiliser $1.4m.

On the domestic front, major buying was reported by banks/ DFIs amounting to $7.09m and individuals $5.12m. While brokers remained net sellers of equities amounting to $4.04m.

Average daily traded volume rose 22pc to 549m shares while its traded value settled at $154m (up by 25pc WoW).

Sector-wise positive contributions came from banks, 342 points, fertilisers, 231 points, and oil & gas exploration, 202 points while power generation & distribution declined 37 points.

Scrip-wise, positive contributions were led by Oil and Gas Development Company with 112 points, Fauji Fertiliser Company 95 points, Meezan Bank Ltd 68 points, Engro 64 points, and Pakistan State Oil 63 points.

On the flip side, Hub Power and Kohat Cement were major laggards showing negative contributions of 43pc and 19pc respectively.

Going forward, pundits expect that market to keep up the bullish performance on the back of growing investor participation, dying noises on the political front and the improved economic figures relating to foreign exchange reserves, remittances, current account surplus and LSM sector.

Arif Habib Ltd analysts said that the approval of Moderna’s vaccine was expected any time soon which was another leap forward in the battle against Covid-19. Healthy corporate earnings are expected during 2QFY21 which should continue fuelling the positive sentiments.

But traders cautioned that the upcoming week would be shortened to four-day session (Friday being off as it would fall on Dec 25). It would also be the futures roll-over week which could bring pressure in the market.

Published in Dawn, December 20th, 2020