KARACHI: The equities market turned in a robust performance in the first outgoing week of the new calendar year thanks to positive developments on the economic front.

Arif Habib Ltd said the stock market displayed notable resilience, experiencing a significant surge of 2,211 points on Monday, recording the second-highest absolute point increase and marking the highest surge on the first working day of a new year.

Moreover, positive economic indicators were evident as the Federal Board of Revenue achieved a historic one-month tax collection of Rs984bn, coupled with a substantial 40.1 per cent year-on-year reduction in the trade deficit for December 2023. However, an elevated level of headline inflation number of December at 29.7pc year-on-year raised some investor concerns.

On a positive note, the State Bank of Pakistan’s reserves reached $8.2bn, the highest level since July 14, 2023. Moreover, the rupee strengthened by 0.16pc against the US dollar, clocking in at Rs281.4.

Hence, the KSE-100 index closed at 64,515 points after gaining 2,064 points or 3.3pc week-on-week.

Sector-wise positive contributions came from oil and gas exploration companies (587 points), commercial banks (392 points), fertiliser (315 points), cement (185 points), and power generation and distribution (166 points). Sectors that contributed negatively were miscellaneous (13 points), glass & ceramics (3.2 points), investment banks (1.3 points), modarbas (one point) and leasing companies (0.1 points).

Scrip-wise positive contributors were Pakistan Petroleum Ltd (268 points), Oil and Gas Development Company Ltd (258 points), Fauji Fertiliser Company (151 points), Hub Power Company Ltd (120 points), and United Bank Ltd (102 points). Meanwhile, scrip-wise negative contributions came from Pakistan Aluminium Beverage Cans Ltd (12 points), Askari Bank Ltd (6 points), Ghani Glass Ltd (4.8 points), Lucky Core Industries Ltd (4.5 points), and BankIslami Pakistan Ltd (3.6 points).

Foreign selling clocked in at $3.1m compared to $1.9m in the preceding week. Major selling was witnessed in exploration and production ($1.95m) and banks ($1m).

On the local front, buying was reported by other organisations ($5.5m) and banks ($5.4m). Average daily volume arrived at 687m shares, up by 5.4pc week-on-week. The average daily value settled at $69.6m, up by 11.6pc from the preceding week.

Topline Securities Ltd observed that the surge in the benchmark KSE 100-share can largely be attributed to aggressive institutional buying after the IMF announced its executive board is meeting on Jan 11 to approve $700m tranche for Pakistan.

Going forward, AKD Securities Ltd said the market is anticipated to maintain its bullish momentum, fuelled by the disbursement of the IMF second tranche. The forthcoming elections will be closely watched, and uncertainty surrounding their outcome could potentially hinder the market’s bullish trend.

However, a peaceful resolution could provide a significant boost to investor confidence. Our recommendation to investors is to maintain long-term positions in companies with strong fundamentals while tactfully managing any fundamentally weak entities through a timely profit-taking strategy.

Additionally, companies offering robust dividend yields, especially in the banking, energy, and fertiliser sectors, present opportunities for accumulation, noted AKD Securities.

Published in Dawn, January 7th, 2024