KARACHI: Shrugging of the ongoing protests against the alleged massive poll rigging particularly in Balochistan, the announcement of a power-sharing formula by the PML-N and PPP restored investor confidence as a result the share market staged a robust recovery in the outgoing week.

The agreement for the new coalition government ended the uncertainty as no political party was able to secure a simple majority in the Feb 8 general elections.

Arif Habib Ltd said the market momentum remained buoyant during the outgoing week, taking the index level beyond 62,000 points again from 59,000 points in the preceding week.

On the economic front, the current account shifted to a deficit of $269 million in January from a surplus of $404m in December 2023. In addition to this, the remittances rose 26pc year-on-year in January.

Meanwhile, the cut-off yields on the three- and 12-month tenors were raised by 126bps and 25bps in the treasury bills auction held during the week. Whereas, the profit rates on national savings schemes were decreased across different certificates ranging from 40bps to 160bps, effective Feb 21.

Furthermore, the power generation cost climbed up by 7.6pc month-on-month in January. Moreover, Roshan Digital Account attracted an inflow of $142m in January vs $160m in December 2023, settling at $7.3bn. The foreign reserves held by SBP declined by $44m to $8.0bn in the week ended Feb 16.

As a result, the KSE 100-share index closed at 62,816 points, significantly gaining 2,943 points or 4.92pc week-on-week.

Sector-wise positive contributions came from exploration and production (623 points), banks (513 points), technology (355 points), fertiliser (255 points) and power (254 points). Meanwhile, the sectors which mainly contributed negatively were miscellaneous (26 points) and chemical (16 points).

Scrip-wise positive contributors were Oil and Gas Development Company Ltd (340 points), Pakistan Petroleum Ltd (221 points), Hub Power Company (216 points), Systems Ltd (201 points) and Meezan Bank Ltd (195 points).

Meanwhile, scrip-wise negative contributions came from Pakistan Services Ltd (57 points), Nestle Pakistan (20 points), Colgate-Palmlive (15 points), Fatima Fertilisers Ltd (11 points), and Askari Bank Ltd (10 points).

Foreign buying continued during this week, clocking in at $2.9m compared to a net buy of $5.2m last week. Major buying was witnessed in all other sectors ($3.7m) and commercial banks ($1.5m). On the local front, selling was reported by individuals ($6.2m) followed by insurance companies ($1.6m). Average volume fell 3.3pc to 338m shares while the average value traded dipped 6.3pc to $45m week-on-week.

Moreover, the result season would continue in the next week, where certain scrips are anticipated to be in the limelight amid the expectation of robust results. In addition to this, scrips are trading at attractive valuations which could entice investors.

According to AKD Securities Ltd, the market would remain heavily influenced by political developments in the short term, with progress towards proper government formation likely to push the index movement upward.

However, in the medium term, the market performance would likely hinge on signals from the new government’s dealings with the International Monetary Fund for a second review under the Current $3bn Stand-By Arrangement and the next EFF programme.

Published in Dawn, February 25th, 2024

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