KARACHI: The stock market managed to bounce back in the outgoing week with the KSE-100 index locking in gains of 241 points, or 0.5 per cent, to close at 47,198 points.

The early days of the week witnessed extension of the bearish spell of last week as investors remained spooked by a volley of bad news including the huge trade deficit of $4.1 billion in August; depreciation of the rupee against the dollar; higher commodity prices; uncertainties on the geo-political front and the ever-changing situation of the Covid-19 pandemic in the country.

During the week, the much-anticipated decision of the MSCI to downgrade Pakistan to Frontier Market (FM) from the Emerging Market (EM) set the market direction, with foreign investors embarking on a major sell-off. However, in the last two days of the week the market staged a strong rally where local buyers rushed to pick up oversold stocks trading at attractive valuations.

Foreign investors intensified selling during the week which amounted to $18.6 million against net sale of stocks worth $5.9m the earlier week. Outflow was witnessed in Commercial Banks of $10.9m, Cement $6.1m and Exploration & Production $0.9m. On the domestic front, Individuals were major buyers of shares valued at $12.9m and Insurance Companies $6.2m. Average daily traded volumes clocked-in at 429m shares with TPL leading the volume leaders with change of hands in 175m shares.

According to AHL calculations, sector-wise positive contributions came from Technology & Communication (214 points), Miscellaneous (168 points), Commercial Banks (148 points), Pharmaceuticals (59 points), and Food & Personal Care Products (14 points). Cement sector pulled the index down, erasing 155 points and 2.6pc of the sector value week-on-week as coal prices continued to trade at nearly 10-year high.

Scrip-wise, positive contributors were made by PSEL (164 points), MEBL (147 points), Systems (115 points), TRG (99 points) and Nestle (39 points). Major laggards included LUCK (103 points), HBL (57 points) and Engro (51 points).

Going forward, the market is likely to remain range bound as a major rally in the last two days of the outgoing week catapulted the KSE-100 index to over 47,200 points. It has continued to provide tough resistance in the past. Strong positive triggers would be required for the index to continue the north-ward journey.

Foreign outflow was witnessed in the two days following the announcement of MSCI downgrade while the sell-off was absorbed mainly by the individuals and brokers. It has to be seen if the institutional investors join to continue the rally.

Investors would now watch out for the next major event of the IMF board’s approval of the next review for a positive outcome. Sto­c­ks in certain sectors are still attractively priced. The gaining momentum was built around the technology sector where major stocks grabbed the spotlight.

Published in Dawn, September 12th, 2021