KARACHI: The Pakistan Stock Exchange (PSX) made strong recovery in the shortened (four-session) outgoing week with the KSE-100 index up by 912 points, or 1.3 per cent, to settle at 45,175.

After almost two months of depression, investors took heart and were encouraged by several positive developments. Finance Minister Shaukat Tarin stated that Pakistan would approach the IMF regarding relaxation in some tough conditions. He also declared that his focus would be on accelerating the growth in economy, which was well-received by the market.

The week also saw the approval for disbursement of the first instalment of circular debt clearance which put the power sector in front, as the major outperformer. There was also a bit of relief on new Covid-19 cases which declined, ruling out a major lockdown in other big cities after it was imposed in Khyber Pakhtunkhwa and Punjab. Other noteworthy news during the week included FBR surpassing its revenue collection target by Rs34bn.

On the corporate front, the result season concluded with the KSE-100 index companies seen to have recorded a stellar growth of 82pc in their quarterly earnings. Local oil sales for April witnessed 57pc year-on-year improvement, which was thought to be an indication of economic recovery; cement dispatches for April also posted a cumulative 10MFY21 growth at 19pc.

On the flip side, the EU Parliament adopted a resolution to review trade relations with Pakistan, which put the country’s GSP+ status in the red zone. National consumer inflation for April was recorded at higher than expected 11.1pc year-on-year; trade deficit widened by 21.6pc in 10MFY22.

Foreign investors turned net buyers of shares worth $1 million in the outgoing week compared to net sale of stocks of $13.1m the earlier week. Buying was witnessed in technology and communication ($1.2m) and cements ($0.7m). On the domestic front, major selling was reported by insurance companies of shares valued at $3.3m and banks/DFIs $3.1m.

Sector-wise positive contributions came from banks (240 points) cement (139 points), fertilisers (124 points), power (107 points) and food & personal care (62 points). Scrip-wise major contributors to the index were led by Lucky Cement (107 points), Hubco (80 points), HBL (68 points), Unity Foods (63 points) and MCB Bank (56 points). Average daily traded volume stood down by 27pc week-on-week to 241m shares while average traded value declined 33pc to $74m.

Going forward, the trend of the market after prolonged Eid holidays would be determined by the numbers of Covid cases; the upcoming MSCI announcement and the news flows concerning FY22 budget. Some market stalwarts advise caution as the stocks could take a dip on possible stricter lockdowns as concerns continue to mount on the pandemic catastrophe in India. But the bulls continue to sell optimism on the back of further progress on the clearance of circular debts that could fuel investors’ interest in the blue chips in the energy and other undervalued stocks.

Published in Dawn, May 9th, 2021