Pakistan equities gain 0.9 percent in the week

KARACHI: Pakistan stock exchange witnessed a highly volatile week ended November 22, 2019 as the benchmark index being through a roller coaster ride closed with nominal gains.

A report issued by Arif Habib Limited noted the market commenced on positive note this week, breaching 38,000 points level, last witnessed in April 2019, amid continued confidence in business climate. Furthermore, IMF approved issue of sovereign guarantees worth Rs250 billion for tackling circular debt which improved sentiment in the power sector.

“However, during the week bears briefly rushed in amid profit taking, implementation of axle load policy and higher inflationary readings causing concerns over delay in SBP’s policy rate cut. Albeit, the fear was temporary as steep rally was witnessed as the week closed on Friday”.

The benchmark KSE-100 shares index gained 0.9 percent or 341.9 points to close the week at 37,925.79 points. KSE-30 shares index gained 1.09 percent or 190.74 points to end at 17,531.27 points.

Foreign buying witnessed this week clocked-in at $8.5 million compared to a net buy of 4.2 million last week. Buying in commercial banks was recorded at $6.7 million and fertilizer at $3.6 million. On the domestic front, major selling was reported by banks/DFIs and insurance companies. Average daily trading volumes surged 6.0 percent to 331 million shares/day.

Ahmed Lakhani at JS Global Capital said it was a roller coaster week as sharp ups and downs punctuated the daily trading sessions during the outgoing week, but the overall sentiment remained positive.

“The improved sentiment comes due to the view that the economy is finally reaching stabilization after painful consolidation measures. Another positive for the equity market was the current account finally eking out a surplus after a lengthy period of 3.5 years”.

Moreover, textile exports recorded 7.0 percent jump in October with particularly strong growth in value added segments. On the economic front, central bank kept the policy rate unchanged at 13.25 percent, while the latest data reveals foreign exchange reserves with the central bank inched up by a mere $45 million to reach $8.4 billion in the week ended November 15, 2019.

“The decision to allow unconditional permission to former Prime Minister Nawaz Sharif to travel abroad for medical treatment also helped clear jitters of political friction. Almost simultaneously, the JUI-F party ended the Azadi (Freedom) March,” Lakhani said.

Other major news during the week include; K-Electric dedicated 12MW grid to Getz pharma, PIA acquired two A320 aircraft on dry lease, Ufone, PTCL announced joint major restructuring, government engaged Oil & Gas Development (OGDC), Pakistan Petroleum (PPL), Mari Petroleum (MPCL) to explore four blocks, a Chinese company expressed intention to invest $250 million in Service Industries, and D.G Khan Cement announced expansion plans.

Going forward, analysts expect the market to remain positive in the upcoming week. “As per expectation, policy rate remained unchanged at 13.25 percent. With current account deficit turning surplus at $99 million and foreign reserves rising amid investment in T-Bills, which has now reached $1.0 billion since July 2019 to date, positive sentiments are expected to persist,” an analyst at Arif Habib Limited said.

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