Stocks gain 1,018 points in last week of 2020

Published January 3, 2021
The final week of the year 2020 brought cheers to the stock market where the KSE-100 index surged 1,018 points or 2.34 per cent to close at 30-month high index level at 44,435 points. — File photo
The final week of the year 2020 brought cheers to the stock market where the KSE-100 index surged 1,018 points or 2.34 per cent to close at 30-month high index level at 44,435 points. — File photo

KARACHI: The final week of the year 2020 brought cheers to the stock market where the KSE-100 index surged 1,018 points or 2.34 per cent to close at 30-month high index level at 44,435 points.

The last trading day contributed 679 points mainly on the euphoria created by reports of repayment schedule devised to disburse total amount of Rs450 billion to independent power producers (IPPs) in 2021 in three equal installments in January, June and December 2020 for partial resolution of the circular debt.

Treasury bills auction was also held during the outgoing week in which the government accepted Rs 630bn against a heavy participation of Rs671bn. Major participation was seen in three-months T-bill at Rs633bn, indicating market expectations of rate hike going forward.

Other than that, confidence was created in the minds of the investors on positive vibes from the International Monetary Fund over outstanding receivables; decelerating inflation at 8pc for Dec; extension of the construction package till Dec 31, 2021 together with the extension of amnesty scheme announced by the Prime Minister; the expectations of receipt of one million doses of Covid-19 vaccine from China along with the decrease in new cases, record rise in exports and the textile sector receiving six months of export orders, memorandum of understanding signed between the government and 17 Paris Club states to defer $800-900m worth of debt.

Average daily volumes improved week-on-week by 5.2pc to 640m shares while the average daily traded value was higher by 3pc to $142m.

Foreign investors’ continued selling during the outgoing week of shares in the sum of $46.22m. On the domestic front, major buying was reported by companies $41.0m and individual $20.04m.

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

According to AHL Securities, 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. Oil marketing companies and textiles also received investor support.

The permission to resume dividend by the State Bank of Pakistan could rejuvenate intrest in the banking sector. Analysts expect the Q4 profitability to show improvement over the earlier one. The major caveat would be the control of Covid-19 and its new variant.

Going forward, gurus reckon that the market would continue to maintain its bullish stance. The reports of government entering into the final phase of agreement over the menacing circular debt issue with IPPs (that saw as many as nine listed stocks on the power generation sector hit their upper circuits on the last trading day of the week) could inject optimism in the entire energy chain. The corporate result season is about to begin and the stock prices would flow with the performance of underlying companies.

Over a million doses of vaccine is expected to be purchased from China within the ongoing quarter. The IMF related news flows on implementation of reforms, rising value of the rupee against the dollar; jump in exports and inflation clocking in at 8pc for December, would all positively impact the market performance.

Published in Dawn, January 3rd, 2021

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