KARACHI: Robust economic data amid an easing of political noise, the stock market maintained its record-setting streak by turning in a stellar performance on extensive mutual fund buying that sent the index soaring by a record point-wise weekly gain of 7,697 points in the outgoing week.

Arif Habib Ltd said the market surged to a record high of 109,478 points, driven by improved inflation data, which dropped to 4.9pc, the lowest level since April 2018. Additionally, Saudi Arabia extended a $3bn deposit with Pakistan for another year to support its economy, providing further momentum to the index. Furthermore, Pakistan has converted seven out of the 37 MoUs signed with Saudi Arabia into formal contracts worth $560m on Monday.

During the week, PSX held an auction of Ijarah Sukuk in which the government raised Rs353bn against a target of Rs500bn. Additionally, petroleum sales clocked in at a 25-month high of 1.58m tonnes, up 15pc, and the total cement despatches were up by 6pc year-on-year to 4.15m tonnes in November.

Moreover, the SBP reserves surged $620 week-on-week to arrive at $12bn as of Nov 29, which reflects a $500m loan from the Asian Development Bank for the climate programme.

As a result, the benchmark KSE 100 index settled at 109,054 points, up 7,697 points or 7.59pc week-on-week, turning the PSX world’s best-performing market in terms of dollar returns.

AKD Securities Ltd said the week-on-week index surge was the highest in 4.7 years. Interest in the banking sector continued to rise, with gross advances increasing by 21pc year-on-year as of Nov 15, taking the advance-to-deposit ratio (ADR) to 46.9pc, with expectations of crossing the 50pc threshold before the year-end to avoid ADR-based taxation.

Meanwhile, the fertiliser sector advanced on Engro Corporation’s agreement to acquire the Jazz Tower business, coupled with the Lahore High Court’s approval of the FFC-FFBL merger.

Moreover, the trade deficit for November clocked in at $1.6bn, down 19pc year-on-year. Additionally, the government’s total debt dropped by 1pc month-on-month to Rs69 trillion in October.

On the currency front, the rupee remained largely flat against the greenback throughout the week, closing at Rs278.01, up 0.01pc against the dollar week-on-week.

Moreover, the index witnessed the highest-ever average volume of 1.68 billion shares, up 72pc and average traded value rose 49pc to $198m week-on-week.

Sector-wise positive contributions came from fertiliser (1,748 points), commercial banks (1,434 points), oil and gas exploration companies (1,148 points), cement (716 points) and power generation (405 points).

Scrip-wise positive contributors were Mari Petroleum (866 points), Engro Corporation (626 points), United Bank Ltd (570 points), Fauji Fertiliser Company (506 points), and Meezan Bank Ltd (402 points). Meanwhile, scrip-wise negative contributions came from Habib Bank Ltd (131 points), Javedan Corporation Ltd (20 points), EFUG (19 points), OGDC (10 points), and Askari Bank Ltd (3 points).

Foreigner selling continued clocking in at $12.2m compared to a net sell of $15.1m last week. Major selling was witnessed in banks ($3.9m), followed by fertiliser ($2.5m). On the local front, buying was reported by mutual funds ($39.6m) followed by banks/DFIs ($8m).

According to Insight Securities, the market will likely continue its bullish momentum next week ahead of the upcoming Monetary Policy Meeting on Dec 16, where the street is anticipating a further reduction of 200-250 basis points in the benchmark interest rates.

The continued softening of monetary policy due to a disinflationary environment and improving macroeconomic environment would make investment in equities more appealing, currently trading at a price-to-earnings multiple of 5.0x and dividend yield of 10.2pc, noted AKD Securities.

Published in Dawn, December 8th, 2024