KARACHI: The stock market recouped some of the losses in the outgoing week as the KSE-100 index managed to claw up by 372 points (0.91 per cent) to close at 41,436.

Although the market started on a negative note, investors interest was rekindled mid-week when disregarding the fluid political situation and weak news flow, they started to count the blessings: increase in oil prices due to political instability in Saudi Arabia and the withdrawal of liquidity requirement by the Securities and Exchange Commission of Pakistan for the mutual funds to maintain 5pc in cash, which prompted the funds to pump fresh liquidity in the market.

“Additionally, excitement over strong automotive sales for October to be released on Monday kept auto sector in the limelight (Honda Atlas gained 9.7pc and Indus Motor 4.5pc week-on-week) whereas upward momentum in crude oil prices kept refiners under pressure (Attock Refinery shed 3.4pc and NRL 2.5pc),” stated analysts at AKD Securities.

Foreign selling slowed down during the week to $1.78 million from heavy outflow of $30.73m witnessed in the preceding week. Major offloading by foreigners was witnessed in commercial banks ($5.36m) and fertilisers ($2.6m). Among local participants, mutual funds absorbed almost the entire sell-off with net buying of $17.3m.

Average daily volume for the outgoing week declined by 3pc over the previous week to 114m shares while the traded value was down 12pc to $60m. Volume leaders were: Pak Elektron (49.81m shares) Japan Power (41.86m), SSGC (38.86m), Azgard Nine (27.37m) and SNGP (25.74m).

Major contributors to the index upside during the week came from Dawood Hercules, which went higher 10pc, PPL 2pc, The Searle 8pc, Millat Tractor 6pc and Honda Atlas 10pc, adding 225 points.

Pak Tobacco fell 12pc, Kohinoor Textile 10pc, UBL 3pc, MCB 1pc and Fatima 3pc, which together robbed index of 115 points. Topline Securities identified major contributions were made by pharmas and auto assemblers, which gained 3pc each, E&Ps and OMCs were up 2pc, cements 1pc while banks edged higher by 0.4pc. Among laggards, textiles shed 1pc, insurance was down 2pc and tobacco tanked 10pc.

News flows during the week included: Ogra has proposed the floating of bids for building a 430km-long oil pipeline from Sheikhupura to Peshawar, Engro Corp is planning to establish its second LNG terminal of 600mmcfd, expected to become operational by early 2019 with consortium partners Shell exploration BV, Fatima Group, and Swiss based Gunvor Group; the domestic cement manufacturers witnessed highest ever capacity utilisation of 93pc in 1QFY18, World Bank raised alarms for Pakistan’s economy and predicted that the inflation number for the FY19 would rise up to 6pc.

OUTLOOK: The semi-annual review of MSCI-EM index (scheduled to be announced at 3:00am PST on Tuesday) is reckoned by some pundits as trigger that could drive market sentiments for major foreign flows.

“Approaching the year-end, we expect mutual funds and individuals to raise participation levels, re-aligning portfolios for the year ahead,” stated AKD Research. Other brokerages such as AHL said in their report that they anticipate the equity bourse to continue showing a volatile trend on the back of ongoing political noise. “However, attractive valuations may inspire a bullish sentiment in the investment climate of the equity market”.

Published in Dawn, November 11th, 2015