The outgoing week proved to be a rollercoaster ride for the Pakistan Stock Exchange as both positive and negative developments continued to influence the direction of the market and kept the index oscillating between the red and green zones.

While soaring Covid-19 cases limited gains last week, some encouraging newsflows lifted the market and helped the KSE-100 index gained 885 points or 2% to close at 45,187 points. The bourse partially erased losses of 1,221 points borne in the prior week.

The week kicked off with a steep drop in the KSE-100 index on back of unsatisfactory economic scenario coupled with a significant jump in coronavirus cases all over the country. The government resorted to impose smart lockdowns in Covid hotspots which caused panic among market participants and kept them at bay.

Read: KSE-100 breaches 45,000-point mark

In addition, reconstitution of the Economic Advisory Council (EAC), abrupt change of finance minister ahead of the budget and a jump in inflation rate to 9% in March sparked a selloff, which dragged the index downward.

The index rebounded in the next session and the market managed to wipe off the losses borne a day earlier following a boost in Pakistan’s vaccination drive that helped accelerate buying activity at the bourse.

Moreover, delay in the anticipated cabinet reshuffle by Prime Minister Imran Khan also provided much-needed political clarity and motivated investors to assume fresh positions.

Clear refusal of the prime minister to impose a nationwide lockdown in view of weakening macroeconomic cues lent additional support to the bullish sentiments.

However, investor spirits broke mid-week after a report from the World Bank painted a gloomy picture of Pakistan’s economy and projected just 1.3% growth in the ongoing fiscal year against International Monetary Fund’s expectations of 1.5% expansion and the index dropped as a result. Investors also weighed sentiments on expected slowdown in the economy in view of persistent uptrend in virus cases.

The last two trading days saw the stock market shoot over 1,200 points due to receipt of $2.5 billion by the State Bank of Pakistan via issuance of Eurobond that lifted the central bank’s foreign currency reserves to a 45-month high value of over $16 billion.

Overall optimism in the wake of approaching corporate earnings season sparked a rally and helped elevate the gains. Moreover, news regarding extension of the Debt Servicing Suspension Initiative (DSSI) by the World Bank till December 2021 was welcomed at the local bourse.

“We expect the market to remain bullish in the coming week,” stated a report from Arif Habib Limited. “With the result season commencing next week, we believe cyclical sectors/scrips will be under the limelight on the back of healthy earnings expectations.”

Average daily traded volume rose 9% week-on-week to 410 million shares while average daily traded value declined 9% week-on-week to $122 million.

In terms of sectors, positive contributions came from cement (280 points), technology and communication (256 points), textile composite (65 points), engineering (58 points) and power generation and distribution (57 points).

Read more: KSE-100 skyrockets on earnings optimism

On the other hand, sectors contributed negatively included commercial banks (40 points), auto assembler (22 points) and fertiliser (21 points).

Scrip-wise positive contributors were TRG Pakistan (251 points), Lucky Cement (124 points), DG Khan Cement (45 points), Hubco (34 points) and National Refinery (33 points) while negative contributors included Fauji Fertiliser (24 points), Bank AL Habib (20 points) and Indus Motor Company (17 points).

Foreign selling continued this week clocking-in at $9.5 million compared to a net sell of $4.9 million last week. Selling was witnessed in commercial banks ($4.2 million) and fertiliser ($3 million). On the domestic front, major buying was reported by banks/development finance institutions ($3.2 million) and companies ($ 2.5 million).

Among other major news of the week; HBL intended to acquire Silkbank, government approved Rs457 billion for PIA restructuring plan, UBL, NIFT signed agreement to enable digital payments via NIFTePay and SBP reserves surged past $16-billion mark.

Published in The Express Tribune, April 11th, 2021.

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