KARACHI: Bullish fire continued to leap over the stock market in the outgoing week where the KSE-100 index gained 1,220 points.

Together with the earlier week’s surge by 1,018 points, the benchmark index managed to show spectacular rise of 2,238 points or five per cent in first two weeks of 2021.

The index crossed the 45,000 barrier and closed at the end of Friday session at two-and-a-half-year high at 45,654 points.

The Pakistan equity market took cue from the run-up in global equity markets where the Nasdaq gained 2.5pc over the week. The domestic underlying events that helped lift investors’ sentiments were reports of the government’s negotiations with the independent power producers (IPPs) to resolve the perennial circular debt issue.

It sent the shares of languishing IPPs soaring to hit their upper circuits for almost three sessions. The IPPs demanded payment of half of the sum of debt upfront, which put a halt to the rally in the power producing and distribution sector. Refineries continued to display heavy price in­­creases. The exploration and production sector also saw stock price upward spiral on the back of a major jump of 7.8pc week-on-week in the international oil prices.

Other positives were the economy taking a turn for the better with foreign exchange reserves with the State Bank of Pakistan up $261 million in the week ending Dec 31, record remittances for Dec and 11.8pc growth in cement despatch numbers.

Investors also cherry-picked stocks in anticipation of healthy corporate profitability in the upcoming results announcement season, mainly by the heavyweight banking sector. Reports of Pakistan receiving its first shipment of Sinopharm vaccine from China by the end of this month provided further support to the market. On the flip side, the sit-ins and rallies against the Hazara killings in Quetta were a slight dampener.

Foreign investors swit­ched to buying in the outgoing week with an inflow of $3.4m. After a prolonged selling spree, including the earlier week’s sell-off of equities in the huge sum of $46.22m. The purchases in the outgoing week, mainly by overseas Pakis­tanis, was a breath of fresh air.

Foreign buying was witnessed in commercial banks amounting to $3.64m and technology $2.0m worth shares. On the domestic front, major selling was reported by insurance companies and banks. Average daily traded volumes rose 18pc WoW at 625m shares while the average value traded settled higher by 8pc to $153m.

According to AHL Securities, sector-wise positive contributions came from banks, up 561 points, fertilisers 224 points, oil and gas exploration 153 points, power generation and distribution 66 points, and chemicals 47 points. Scrip-wise positive contributions were led by United Bank Ltd 154 points, Habib Bank Ltd 117 points, Meezan Bank Ltd 90 points, Dawood Hercules Ltd 88 points and MCB Bank Ltd 80 points.

Going forward, market enthusiasts say that although close to breaching the 46,000 level, they expect the index rally to continue on the back of improvement in economic numbers and tone down in political noise.

The developments on the vaccine front and its gradual roll-out across the world including Pakistan is likely to put faith in the minds of investors. The major trigger going forward is the start of the winter results season where analysts expect companies to unveil sales and earnings growth.

The banking sector which has under performed is expected to catch up with the rally as they come up with healthy profitability and resumption of dividends.

Published in Dawn, January 10th, 2021