KARACHI: In the outgoing week, investors celebrated the success of Prime Minister Imran Khan in cajoling Saudi Arabia to announce a package of $6 billion ($3bn cash for balance of payment support along with another $3bn as deferred oil import payments extendible up to three years).

The KSE-100 index recorded stellar gains of 2,126 points (5.53 per cent) and closed well above the 40,000-level at 40,556 points. On Wednesday, the market rallied by 1,556 points, marking the second highest gain since June 2017. The rupee strengthened by 1pc against the dollar during the week.

The Saudi package provided comfort to investors as some clarity emerged on the economic front. Brokers said that it dispelled clouds of uncertainty that had hung over the market for a long time. Institutions did anticipatory buying as more support was expected from the UAE and China.

Stocks continued to climb in last three days of the outgoing week as investors believed that the financial packages from Saudi Arabia and China would help Pakistan grapple with the looming current account deficit and replenish the State Bank foreign exchange reserves which have dwindled to $8.7 million.

Market participants hold the consensus view that after securing financial assistance from Saudi Arabia and China, the country would be on a better footing to negotiate a smaller aid package from the International Monetary Fund (IMF) on softer terms.

Fall in global oil prices on the last day of trading enthused investors while negatives such as the rout in global markets, prospects of removal of Pakistan index from MSCI Emerging Market and increase in base electric tariff could not weaken the sentiments at the local bourse.

The outgoing week also encompassed a mix of quarterly results out of which Oil and Gas Development Company entailed positive surprises while Habib Bank, DG Khan Cement and Hub Power Company were major disappointers.

Daily traded volume jumped 51.1pc to average 301m shares in the outgoing week, led by Bank of Punjab at 147m shares, K-Electric 115m, Lotte Chemical 91m shares and TRG Pakistan 54m. Average daily value traded also improved by 54pc to $75.4m.

Foreign investors sold stocks worth $17.2m during the week against net selling of $19.1m the preceding week. Foreign outflow was concentrated in commercial banks at $8.9m, exploration and production $5.7m and all other sectors $5.1m. On the local front, mutual funds stood out by far the biggest buyers of equity amounting to $24m while individuals and banks were net sellers of $9.9m cumulatively.

Amongst the listed sectors, fertilisers added 475 points, followed by oil and gas exploration companies 298 points, banks 285 points, oil marketing companies 216 points and cement 214 points.

Scrip-wise, major gainers were Engro Corporation, Fauji Fertiliser, Oil and Gas Development Company, Pakistan Petroleum and MCB collectively contributed 685 points to the Index. Decliners were Pakistan Tobacco, decreasing by 19 points, Bank Al Habib 17 points and Habib Metropolitan Bank 9 points.

Moving forward, investors expect the market to perform in line with the outcome of PM’s visits to the friendly countries and the total sum in aid packages from China and Malaysia. With macro concerns in the limelight, tangible progress on the IMF bailout package remains crucial. As the results season is in full swing, any positive surprise on the earnings front could give a further boost to investor confidence.

Published in Dawn, October 28th, 2018

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