KARACHI: Belying expectations of a pullback, bulls continued their relentless charge at the stock market in the outgoing week with the KSE-100 index accumulating 658 points (1.62 per cent) to close at 41,200.
Early in the week, the index tested the uncharted territory, touching 41,447 points. Already the Pakistan Stock Exchange (PSX) has provided returns of 26pc since the start of this calendar year.
Average daily volumes increased 14pc to 605m shares during the week while average daily value rose 13pc to Rs17 billion. Volume leaders were: BoP (269m shares), PIA (175m), PACE (145.8m) and WTL (139m).
Foreign investors were net sellers of $8.3m worth stocks during the week. Major outflow of $6.3m was witnessed from the oil and gas marketing sector, while foreign funds purchased $5.9m worth banking stocks. Local individuals and mutual funds remained active in the market adding $14.05m and $13.34m worth stocks to their portfolios.
Although the equities saw gains across the board, greater upsurge was noted in cement sector (2.2pc), followed by fertilisers (1.9pc) and banks (1.7pc) over the previous week.
Apart from index heavyweights, rally in low and mid-market cap sectors continued throughout the week, driven mainly by stock related rumours. However, oil and gas sector underperformed despite rebound in international oil prices.
Leading gaining scrips during the week included: LOTCHEM (21.4pc) Shell Pakistan (15.5pc), SNGPL (11.9pc) DAWH (10.1pc). Murree Brewery (8.29pc), Lucky Cement (4.05pc), UBL (2.93pc) and Engro (2.79pc). Laggards were led by HCAR (4.62pc), PSMC (4.05pc) and PPL (3.78pc).
The investor sentiments during the outgoing week were buoyed by an encouraging response from global debt market for Pakistan’s international sukuk, positive outlook on Pakistan’s banks from Moody’s Investor Services, forex reserves rise to record high of $23.612bn, upbeat CPI read (3.88pc for September), consolidation in global oil benchmarks and increase of 8.3pc year-on-year in cement despatches in the 1QFY17.
OUTLOOK: While slight profit-taking set in towards the end of last week, the tone remained firm due to strong valuations. The KSE-100 is currently trading at price-to-earnings ratio of 9.5 times against Asia Pacific regional average of 15 times in 2016.
The KSE-100 index continues to offer dividend yield at 5.1pc against 2.4pc offered by the region. Some senior brokers reckoned the market to remain range-bound in the upcoming week. Cement sector was thought to stay under pressure due to a surge in coal prices as they cross $80 a tonne, while the banking sector could be the investor’s preferred play attributable to Moody’s maintaining stable outlook.
