KARACHI: In the coming week, the stock market posted gains in all five sessions, which is a positive event seen after 26 weeks. The KSE-100 index jumped 741 points (2.2 percent) and closed at 34,008, sped past the psychological barrier of 34,000.
The improvement in investor sentiment is based on the government opening lockouts to continue business activities. Other reasons for the positive outlook are the MSCI semi-annual review which maintains Pakistan in the emerging market index and the increase in the cement and steel sector at the PTI announcement to begin construction of the Diamer-Bhasha Dam; recovery of international oil prices which gives life to exploration and production stocks and Rs50bn agricultural packages that result in purchases in fertilizer scripts.
The pharmaceutical sector witnessed increased activity after Ferozsons – who gained 44pc for a week – announced an agreement between its subsidiary and Gilead to make the experimental drug Remdesivir for the treatment of COVID19.
Among other events, the beneficial contribution of the International Monetary Fund to Pakistan to grapple with economic shocks caused by the pandemic was encouraging while Moody’s actions to place the country’s sovereignty ranking under review did not reduce sentiment.
Foreigners released shares worth $ 10.91 million compared to net sales of $ 17.82 million the previous week. The main foreign selloff was witnessed in a $ 2.89 million commercial equity bank and the power and distribution sector in the amount of $ 2.40 million.
On the local front, purchases were reported by individuals in the amount of $ 5.56 million, followed by mutual funds of $ 4.97 million. Average volume stood at 219 million shares, up 15 percent, from the previous week while the average value traded rose 13 percent to $ 40.3 million.
Contributions to the upside led by oil and gas exploration companies, higher by 192 points, cement 177 points, fertilizer 148 points, food and personal care products 61 points, and technology and communication 57 points.
The main advantages according to the script are Fauji Fertilizer, up 74 points, Mari Petroleum 73 points, Lucky Cement 66 points, Nestle 59 points, and Oil and Gas Development Company 56 points. While the main losers were Al Habib Bank, down 40 points, Sui Northern Gas Pipelines 35 points, Allied Bank 20 points, Indus Motor Company 17 points and Pakistan Tobacco 14 points.
In the coming weeks, the market will likely remain in the range because of the last days of Ramazan when people concentrate more on seeking blessings from the almighty, putting aside other matters. With the Eid al-Fitr holiday, weak investors can choose to take profits.
The SBP monetary policy announced after the close of trading on Friday is in line with market consensus expectations about a 100bps rate cut, which is unlikely to spur activity on that account. Anticipating the steps that are likely to be taken in the coming federal budget can set direction as well.
But all will be subject to the state of the number of coronavirus infections and the level of lockdowns that can suppress or revive business and industrial activity.
Published in Dawn, May 17, 2020
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