Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh on Sunday said the "strong rally" in the stock market shows "increasing investor confidence on stabilisation measures taken by the government".

In a tweet, the premier's adviser said the KSE-100 index was up by 14.9 per cent in November, which he said was the highest one month return after May 2013, adding that the index has increased by 36.6pc (10,500 points) since August 16.

The stock market rallied for the fifth week in a row in the outgoing week as bulls displayed no signs of fatigue. The KSE-100 index propelled by 1,362 points (3.59 per cent) and stormed past the 39,000-level after eight months to close at 39,288.

During November, the index had closed positively for a third straight month and gained 15pc, the highest monthly gain since May 2013.

In the outgoing week, trading started on a positive note, attributable to State Bank leaving discount rate unchanged, which bodes well for the local bourse. But the index took a plunge of 400 points the very next day as the Supreme Court took notice of the extension in tenure of the army chief.

Although the hearings continued to be followed closely by the investors, there was no panic. On the macro front, Pakistan saw a cumulative influx of $713 million in government securities through SCRA in November to date, taking total inflow to $1.2bn which helped shore up the country’s foreign reserves by $240m to $15.6bn at the end of the week.

Foreign investors sold stocks worth $8.06m which came mainly from rebalancing in November semi-annual review of the MSCI Index which saw three Pakistan shares deleted from the MSCI Global small cap Index. Outflow was witnessed in Cements ($3.36m) and E&P ($1.95m). On the local front, buying was reported by Mutual Funds of $11.06m followed by Individuals picking up shares of $7.30m. Bank sold shares valued at $6.9m.

Market participation improved with average daily volume at 348m shares, representing upswing of 5.1pc over the preceding week whereas value traded registered increase of 8.3pc at $79.6m.

Sector-wise, contribution to the index upside was led by commercial banks, higher by 522 points due to attractive valuations, encouraging uptrend was witnessed in release of Public Sector Development Programme that helped cement stage a 5pc or 120 points run-up. Fertiliser gained 116 points, automobile assemblers 80 points and chemicals 75 points.

Among scrips, gains came from United Bank, higher by 8.92pc, Habib Bank 6.19pc, MCB 4.78pc, Fauji Fertiliser 4.49pc and Lucky Cement 5.11pc. Meanwhile, for the outgoing month, a major upside was witnessed in Hub Power, increasing by 25.44pc, Habib 15.52pc, Engro Corporation 14.14pc, United 18.85pc and MCB 16.04pc.

Although the current rally has recouped much of the losses and the Index is back in the green after three bad years, seasoned market players say there is room yet for the index to creep up.

Most expect the market to remain positive in the upcoming week on the back of improving macroeconomic numbers, drop in fixed income yields, stable exchange rate which have been so for the past four months and a positive outlook on monetary easing.

Investors would also be relieved as the dust on the political horizon appeared to settling down, providing a clearer view of medium-term outlook.