KARACHI: Stocks extended the gaining streak for third consecutive week with the KSE-100 index recording gains of 508 points (1.21 per cent) to settle at 42,531.

The week started off on a positive note as investors showed considerable interest in cement, steel, automobiles, refineries, and oil marketing sector on account of improvement in growth prospects given revival of economic activity.

On Tuesday, a decline was witnessed in the index attributable to pressure on global equities and decrease in international oil prices which resulted in selling pressure. However, negative performance remained short-lived as the high court granted a stay order in favour of fertiliser manufacturers who are eligible for concessionary gas regime under the fertiliser policy of 2001.

Other than that, the launch of Roshan Digital Account for overseas Pakistanis also spurred buying. Profit-taking was seen on Friday as investors decided to err on the side of caution in carrying over heavy positions over the weekend.

Foreign investors offloaded stocks worth $4.40 million compared to a net sale of $10.03m the previous week. Major outflow was witnessed in exploration and production of $1.15m and fertiliser $1.01m. On the local front, buying was reported by individuals of shares valued at $22.84m, followed by mutual funds $8.50m. Meanwhile, companies booked profit in scrips worth $16.7m.

Investor participation increased with average volume recording uptick by 0.7pc to 750m shares and traded value mounting by 1.7pc to $142m. Sector-wise, contribution to the upside was led by commercial banks, higher by 181 points, fertiliser 157 points, power generation and distribution 61 points and insurance 53 points. Cement added 70 points as sales data for August was reported with a growth of 5pc.

Other gaining sectors were refineries, up 15.8pc, food and personal care 5.8pc and technology 6pc. Major losing sectors were chemicals and oil and gas exploration. Scrip-wise main gainers were Lucky Cement, higher by 124 points, Enrgo Corporation 76 points, Hub Power 69 points, MCB 58 points, and Fauji Fertiliser 54 points. On the flip side, key decliners losers were Oil and Gas Development Company, down 48 points, Mari Petroleum 32 points, Colgate-Palmolive 28 points, Pioneer Cement 24 points and Maple Leaf 22 points.

Major news flow included; increase in State Bank of Pakistan’s foreign exchange reserves by $95m to $12.81bn; auto sales for August showing growth of 15pc; KIA Lucky Motors announced operation of its plant on double shift starting January 2021 to keep up with the rising demand for Sportage and Picanto.

Going forward, most market gurus expressed cautious optimism. Improvement on macroeconomic front; an almost miraculous decline in Covid-19 active cases that has enabled the economy to open up; and continued interest by High Net Worth Individuals in the value stocks are banked upon to help the market carry forward the rally.

Lower yields on fixed income instruments have made equities the preferred asset class. Stable rupee might generate interest of foreign investors in blue chips. The market would also look forward to key event of the announcement of SBP monetary policy statement this month, where the benchmark interest rate is thought to remain unchanged.

Published in Dawn, September 13th, 2020