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Optimism fuels bullish momentum

KARACHI:

Bullish momentum prevailed at the Pakistan Stock Exchange in the outgoing week as a host of encouraging developments tossed the benchmark KSE-100 index above the 47,000-point mark.
Investors took cue from clarity on the political front, rupee appreciation against dollar and growing optimism about Pakistan’s economy on the back of $4.2 billion assistance from Saudi Arabia and lifted the KSE-100 index by over 1,111 points, or 2.4%, at 47,295.8 by the end of the week on November 5, 2021.
“Rebound in the rupee against the greenback (settling at Rs170.01), substantial reduction in international coal prices (down 34% week-on-week) and narrowing of trade deficit on a month-on-month basis by 10% further strengthened the sentiment,” said a report of Arif Habib Limited.
The KSE-100 index spiked on Monday and added more than 900 points in the first two sessions as the Pakistan Stock Exchange reverted to the old trading system (KATS) after technical glitches in the new system marred activity in the prior week.
The end of protest in Islamabad following an agreement between the government and a political party created the much-needed political clarity, which encouraged investors to inject money into the bourse.
Additionally, upbeat oil sales in October, which surged 17% year-on-year, revived investor confidence and they made fresh investment.
The trend reversed midweek and the trading environment turned unimpressive on Wednesday owing to market expectations of a hike in policy rate by the State Bank of Pakistan (SBP) in the forthcoming monetary policy.
Moreover, a temporary leap in international coal prices further dampened investor spirits.
Bulls staged a return in the last two sessions of the week after Prime Minister Imran Khan announced a relief package worth Rs120 billion to arrest the hike in prices of food items.
The pause in rupee’s decline revived investor confidence and kept supporting stock buying throughout the week.
Furthermore, hopes for a resumption of the International Monetary Fund’s (IMF) $6 billion loan programme bolstered the market.
“We expect the market to remain positive in the upcoming week. With the IMF and Pakistan expected to reach an agreement soon, investor sentiment is anticipated to be upbeat,” Arif Habib Limited stated in the report.
“However, current macroeconomic concerns such as higher inflation reading due to a jump in petroleum product prices could keep the market range bound.”
Average daily traded volumes inched up 2.4% week-on-week to 430 million shares while average daily traded value soared 121% week-on-week to $89 million.
In terms of sectors, positive contribution was led by technology (490 points), fertiliser (136 points), refinery (115 points), oil marketing companies (36 points) and textile composite firms (33 points).
On the flip side, sectors which contributed to the downside were textile weaving (14 points) and paper and board (9 points).
Stock-wise positive contributors were Systems Limited (241 points), TRG Pakistan (210 points), Meezan Bank (72 points), National Refinery (48 points) and Fauji Fertiliser Company (41 points).
Meanwhile, negative contribution came from UBL (38 points), Lucky Cement (35 points) and HBL (33 points).
Foreign selling continued during the week under review, which came in at $11.2 million compared to net selling of $2.7 million in the previous week.
Major selling was witnessed in commercial banks ($5.6 million) and fertiliser firms ($1.4 million). On the local front, buying was reported by individuals ($14.5 million), followed by insurance companies ($6.5 million).
Other major news of the week included foreign exchange reserves reaching $23.925 billion, Ufone signing Rs21 billion syndicated financing for 4G services, urea sales surging 10%, Ogra cutting sale price of gas producing firms and textile exports hitting a lifetime high of $6.04 billion in July-October.
Published in The Express Tribune, November 7th, 2021.
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