KARACHI: Bulls managed to drive away the bears in the outgoing week to reconnect with the earlier three-week winning spree. The KSE-100 index stormed past the 46,000 points resistance and settled at 46,386 points to record gains of 518 points, or 1.1 per cent, in the outgoing week.
The index closed positive in four out of five sessions in the roll-over week, underpinned by the unchanged policy rate in the monetary policy. The technology and the cement sector grabbed the spotlight. Hike in cement prices in North kept the sector stocks in demand throughout the week.
Uptick in international crude prices could not fully translate in the rise in E&P stocks. The heavyweight in banking also remained subdued which overall represented underperformance by the blue-chips while the rally was mostly carried forward by the second and third-tier stocks.
Traders said that the delay in the textile policy 2020-25 and the decision on OMC dealers’ margins poured some cold water over the investor sentiments. The IMF projected growth of 1.5pc for Pakistan for the FY21, up from earlier forecast of 0.5pc, was a positive.
Furthermore, the ADB has approved $10bn five-year loan programme for Pakistan. Foreign exchange reserves held with the SBP remained flattish at around $13bn in the week ending Jan 22.
The results announcement season also kicked off in the outgoing week with steel and automobile companies putting up a better-than-expected top and bottom lines for quarter-ended Dec 31, 2020. The decrease in Covid-19 cases and the expectations of arrival of the first batch of Sinopharm vaccine were sentiment boosters.
Investor participation grew during the week with the average daily traded volume up by 36pc week-on-week to 673m shares while the traded value was up 44pc. Foreign investors though occasionally picking up Pakistan equities in the net represented selling of stocks worth $9.1m against net purchases of $5.5m in the preceding week. The outflow was recorded in commercial banks in the sum of $2.7m and companies $8.1m. On the domestic front, major buying was recorded by Individuals in the sum of $8.7m and companies $8.1m.
According to Arif Habib Ltd, the sector-wise positive contributions came from cement (326 points), technology & communication (201 points) amid foreign interest witnessed during the week, pharmaceuticals (70 points), and power generation & distribution (60 points). Whereas sectors that contributed negatively included commercial banks (166 points), oil & gas exploration companies (81 points), and fertilizer (54 points).
Top scrip wise contributors were TRG (216 points), Lucky Cement (84 points), and FCCL (59 points).
Going forward, pundits expect market to keep up the bullish performance mainly on the back of results announcement season where corporates are expected to release stellar earning figures since the impact in the fourth quarter 2020 for which results would be forthcoming had overcome the vagaries of the Covid-19.
Most companies in the textile, cement, steel, basmati rice and other cyclical were able to meet the pent up demand mainly in exports and even wrest global market share of other countries where pandemic had still stifled production and sales.
A major event in February is the FATF meeting that would determine Pakistan’s status (to stay or exit from the grey list). Any negative or positive surprise in the decision can majorly impact the market. The control on the Covid-19 and start of vaccinations in the week ahead could provide relief to the investors.
Published in Dawn, January 31st, 2021