KARACHI: The stock market gained more than 500 points during the week, mainly guided by the news flow as the results announcement season came to a close.

Politics dominated the first two days as jittery investors resorted to heavy profit-taking over the delay in the formation of a joint investigation team to consider the Panama Papers case.

But just as the investors seemed to be following the old adage “Sell in May and go away”, bulls charged with a vengeance in the latter two days as investor attention shifted to the upcoming MSCI emerging-market review on May 15, leading up to the actual upgrade on June 1.

The benchmark KSE-100 index wrapped up the week with a gain of 550 points, or 1.12 per cent, and settled at 49,851.

With the week cut short by a day due to Labour Day on May 1, the average daily volume fell 28pc to 259 million shares while the traded value dropped 23pc to $130m.

Aggregate average volumes in the six likely MSCI scrips — i.e. Habib Bank Ltd, United Bank Ltd, MCB Bank, Lucky Cement, Engro Corporation and Oil and Gas Development Company — shot up 5pc week-on-week. These shares were also the leading gainers during the week, adding 681 points to the index.

In contrast, Hub Power Company fell by 2.4pc, Searle by 4.1pc, Mari Petroleum by 3.8pc, Pakistan Oilfields (POL) by 2.6pc and Sui Northern Gas Pipelines Ltd by 2.9pc, taking away 154 points off the index.

Foreign investors remained net sellers with an outflow of $19.2m in the week compared with $10.7m the week before. Foreign sell-off was concentrated in cement ($5m), power ($2.8m) and banks ($1.8m). Among local participants, individuals purchased stocks worth $27.8m and turned out to be the biggest buyers.

The banking sector outperformed the index with its market capitalisation growing by 3.8pc week-on-week as the three big banks would be included in the MSCI emerging-market index. Banks collectively added 527 points to the index.

The exploration and production sector shed 4pc as international oil prices tanked on concerns of a persisting supply overhang. Mari Petroleum and POL were hammered down by 26 and 25 points, respectively.

Fertiliser scrips contributed 124 points to the index, with major gainers being Engro Fertilisers (up 103 points) and Fauji Fertiliser (up 30 points), both rallying on the back of MSCI-driven sentiments.

The cement sector contributed 123 points with the two MSCI hopefuls, Lucky Cement and Fuji Cement, rising up by 142 and 20 points, respectively. Power generation stocks, which lost 57 points, were marred by a lack of payout and weak financial results. Hub Power Company shed 46 points.

Major news that affected the stock market included: National Electric Power Regulatory Authority initiated proceedings for captive power tariff; a United Nations’ survey visualised higher GDP growth for 2016-17 and 2017-18 at 5.2pc and 5.4pc, respectively; Pakistan International Bulk Terminal handled the first vessel with 41,000 tonnes of coal; and Neelum-Jhelum project entered its final phase.

OUTLOOK: With the results season starting to fade away, the investor interest would turn to budgetary proposals. Refurbished margin product is also awaited, which could boost volumes. Meanwhile, most market participants suggested caution and believe that the stocks could retain investor interest in anticipation of foreign inflows after the MSCI reclassification.

Published in Dawn, May 7th, 2017