The KSE-100 index is doddering at the 32-month high of 46,000 points. Yet optimists, mainly brokerage houses, have projected the benchmark will settle between 52,400 and 60,000 points by the end of December.

If that seems too high, one ought to have heard former finance minister Dr Salman Shah tell a TV show host that it should not take much of strength for the index to reach 80,000 points by the end of the year provided there were no external shocks or mishaps.

He based his assertion on the premise that major economic and pandemic-related challenges had been handled well. “We have a good relationship with all economic blocs. Normal access to the United States without discrimination, GSP-Plus status in the European Union and a free-trade agreement with China,” the former finance minister said.

Most analysts agree that the second wave of Covid-19 had little impact on the industrial output

Those who are betting on the good times to roll in at the stock market — which is already up by an incredible 18,863 points or 69 per cent in a little over nine months — are expecting stellar growth in underlying corporate profitability.

Intermarket Secu­rities Head of Equities Raza Jafri observes that the July-September quarter was one of the best with regard to broad-based growth in company profits. The winter corporate result season is about to commence and chemical companies, pharmaceuticals and textiles could show splendid results. Textile and clothing exports grew 4.8pc year-on-year to $6.04bn in July-November, according to the Pakistan Bureau of Statistics (PBS).

The cement sector will return to profitability while flat steels are in demand by the appliances industry. Earnings of banks could remain stable while hefty dividends might be disbursed by big banks —

UBL, HBL and MCB — to compensate for three quarters of nil pay-outs due to a restriction by the central bank.

Foundation Securities said strong agronomics allowed fertiliser companies to retain the pricing power in both local and foreign markets. The sector’s profitability is expected to grow by a phenomenal 84.7pc year-on-year due to better

DAP margins, reduction in GIDC and decline in finance cost owing to a 625-basis-point cut in the policy rate.

As for the automobile sector, Intermarket Securities said it expects the auto assemblers to post a combined profit after tax of Rs2.9bn for October-December, up from Rs2.4bn in the previous quarter on the back of 8pc quarterly growth in volumetric sales.

Most analysts and strategists affirm that the second wave of Covid-19, which raised its ugly head in mid-November, did little damage to the industries. Ahmed Chinoy, an elected director on the Pakistan Stock Exchange (PSX) board and president of the All Pakistan Cloth Merchants’ Association, said the complete lockdown during the first wave of pandemic had done immense damage to the industrial output. “Industrial production was brought to a grinding halt for as many as four months.”

The government listened to the captains of industry during the second wave and desisted from imposing lockdowns in the primary exportable goods–producing industry and then in secondary sectors. Figures speak louder than words. As per the latest data published by the PBS, largescale manufacturing (LSM) posted growth of 14.4pc year-on-year in November, taking cumulative growth in the LSM output to 7.4pc in July-November.

Mr Chinoy said textile spinning units were operating at full capacity, though the availability of yarn was an issue. He suggested that the regulatory duty of 5pc on the import of yarn should be withdrawn. The textile industry is clearing the backlog of four months and the industry is well-placed to wrest export markets away from competitors that are unable to meet export orders. The caveat, he said, was the supply of energy.

Majyd Aziz, industrialist and former president of the Employers’ Association of Pakistan, concurred with the views of Mr Chinoy. He affirmed that the wheels of industry were at full throttle after the lifting of the lockdowns. Exports of textiles, sports goods, pharmaceuticals and software were on the rise to meet the demand in the West. Pakistan is hugely benefitting from the spill-over of textile export demand that India and Bangladesh were unable to meet.

He said the shortage of yarn was indeed an issue but hesitated to endorse the import at this moment. It needed to be done after market forces had been exhausted. Mr Aziz believed that the induction of women in the mainstream industrial and commercial activities could generate great results.

“Women could be employed in the construction and other industries and more hands on board mean round-the-clock production instead of current 10-12 hours of capacity utilisation,” he said.

Both industrialists were of the view that macro-economic stability had been created. The government needs to control inflation and generate economic growth. Pakistan’s reputation as a timely supplier of export goods has received a tremendous boost in overseas markets.

Headwinds could be the turn of events for the worst on the pandemic, energy shortage and isolated cases of terrorism. “But by and large, the risk remains on the production side and not on foreign sales,” they said.

Published in Dawn, The Business and Finance Weekly, January 18th, 2021