Bulls staged a comeback at the Pakistan Stock Exchange after three weeks as a spate of positive developments helped the KSE-100 index surge 1,113 points or 2.54% to power past the 44,000-mark and it settle just a few points shy of 45,000.

Trading kicked-off Monday on an upbeat note as market participants welcomed clarity on the political front after the Senate chairman election – which saw Sadiq Sanjrani come back as the upper house chairman – and economic front where diminishing concerns over withdrawal of tax exemptions encouraged market players to buy stocks.

The index rallied nearly 1,000 points on the first day of the trading week as investor excitement was underpinned by expectations of quick economic recovery worldwide.

The uptrend continued in the following two sessions as encouraging growth in large-scale manufacturing sector, which grew 7.9% in the first seven months of the current fiscal year, decision taken by the opposition alliance – the Pakistan Democratic Movement (PDM) – to postpone its long march, consistent improvement in rupee value against the US dollar and expectations about maintaining status quo in the Monetary Policy Committee (MPC) meeting kept the investment climate positive.

The KSE-100 added a total of 2,671 points, or 6.24%, during the four trading days (Friday-Wednesday). It was the highest four-day increase since April 3, 2020, when the index surged 3,598 points.

However, the optimism did not last as the bourse turned bearish on Thursday with stocks diving over 700 points as investor sentiment took a hit after the daily tally of Covid-19 cases soared beyond expectation and sparked fears of yet another lockdown.

Moreover, market participants also remained cautious ahead of the monetary policy announcement, though the market anticipated a status quo, the participants still offloaded holdings in a bid to play safe in case of a surprise change in the rate.

Fortunately, the market once again turned bullish on the last trading day of the week. The bourse shed the gloom of the previous session on bets of status quo in the monetary policy, which the State Bank of Pakistan (SBP) announced towards the end of the session on Friday.

In line with market expectations, the central bank left the benchmark interest rate unchanged at 7% for the next two months.

“Going forward, we expect the market to trade in green due to SBP keeping policy rate unchanged, which is positive for the stock market, encouraging SBP projections and appreciation of rupee and dollar parity,” stated Arif Habib Limited in its report.

“However, any surprise increase in domestic Covid-19 infection ratio may dampen investor’s sentiments.”

Average daily traded volume rose 11% week-on-week to 483 million shares while average daily traded value came in at $144 million, up 4% week-on-week. In terms of sectors, positive contribution came from technology and communications (+296 points), commercial banks (+214 points), cements (+107 points), oil and gas marketing companies (+89 points) and refinery (+61 points). Stock-wise, the positive contributors were TRG Pakistan (+227 points), HBL (+140 points), Systems Limited (+66 points), UBL (+64 points) and Pakistan State Oil (+60 points).

Negative contributors included Oil and Gas Development Company (-41 points), Engro Corporation (-28 points), Bank AL Habib (-26 points), Mari Petroleum (-10 points) and Philip Morris Pakistan (-9 points).

Foreigners turned sellers during the week as they bought shares worth $3.04 million compared to net buying of $3.64 million in the previous week. Buying was witnessed in commercial banks ($6.5 million) and cement ($1.5 million). On the domestic front, major selling was reported by banks ($11.2 million) and companies ($8.2 million).

Among other major news of the week were reduction in rates of income tax to be withdrawn, Roshan Digital Account attracted $671 million in six months, LSM posted 9.1% growth in January 2021, rupee rose to one-year high, FDI declined 30% to $1.30 billion in July-Feb, and auto-financing clocked-in at an all-time high of Rs273 billion.

Published in The Express Tribune, March 21st, 2021.

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