KARACHI: Bulls continued to rampage on the stock market for the third week in a row and the benchmark KSE-100 index stormed past the 46,000-point level after 32 months.

Having climbed by as many as 2,238 points in the two preceding weeks, the bulls seemed to be exhausted and after volatile trade in two of the three trading sessions, the index closed with comparatively subdued gains of 277 points, or 0.61pc, at 45,931.

The ECC twice changed the dates for announcement of the textile policy during the outgoing week, which weakened investor sentiments on the textile sector. The government could not reach an agreement with the Independent Power Produ­cers over the circular debt issue, which also was the dampener for investors who had accumulated shares in the energy and particularly the power production sector.

The local market also followed the international equity markets which were volatile over the growing Covid-19 cases, uncertainty over the vaccine distribution and its efficacy and above all the extraordinary events in US where the House of Repr­e­sentatives twice impeached President Trump.

On the local political scene there was a thaw as opposition appeared to have withdrawn slightly from its aggressive protest rallies. Investors were buoyed by the improvement in macroeconomic indicators where the Large-Scale Manufacturing sector grew by a substantial 14.5pc year-on-year in Nove­mber and remittances jum­ped 16.2pc for December 2020 at $2.4bn over the same month last year.

Average daily volume was up 9pc over the earlier week to 682m shares while the traded value settled higher by 16pc to $129m. Mid-tier stocks led the rally in the outgoing week while blue chips generally remained under performers.

Going forward market strategists are cautiously optimistic. Improving macroeconomic indicators, stability of the rupee and figures of cement despatches, automobile sales and uptick on fertiliser use would determine corporate performance.

The quarterly financial results for September-December 2020 are due and could start pouring in the market next week. The performance and pay-out would be a big factor in the movement of stock prices.

Although quiet at the moment, the outcome of the Opposition’s march and protest at the offices of Election Commission in Islamabad on the 19th would set the tone for the political developments ahead.

Any uncertainty on the issue would be a bad augury for the market. Other issues that could set the direction of the market going forward is the performance of global equity and oil markets and the roll out of Covid-19 vaccine on the global front and the continuation of control on the pandemic cases in the country. The other dampeners could be the revision in power tariff and the increase in petroleum product prices.

Published in Dawn, January 17th, 2021