KARACHI: Stocks rebounded in the outgoing week with the KSE-100 index up by 965 points (2.06 per cent) to close at 46,877.

Investors were comforted with the end to political uncertainty after the Supreme Court’s verdict on the Panamagate case on July 28.

Aggressive buyers were quick to seize the opportunity to reshuffle portfolios and even poured more money into equities at low valuations. Retail investors tried to recover losses by churning low-cost stocks. The rejuvenation of the investor interest was noted in increased participation. The weekly volume of transactions surged 76pc to 349 million shares while the traded value jumped 62pc to $157m over the earlier week.

Market watchers contended that the smooth transition of power to the new prime minister, who quickly put together his cabinet, also helped boost investor sentiments.

Foreign investors sold $41.1m worth of shares during the week, representing a quantum leap from sales of shares worth $13.2m in the preceding week.

Major foreign inflow was seen in the fertiliser sector ($1.1m) whereas major outflows were in cement ($13.2m), exploration and production ($6.1m) and banking ($4.9m). Although selling was largely absorbed by mutual funds with fresh pickings worth $34.1m, individuals also bought shares of $17.9m. Banks chose to reduce their positions by $6.2m.

The advent of the result season saw stock prices respond to corporate earnings and payouts. Sector-wise, upside to the index came from oil and gas marketing companies (219 points), cements (133 points), fertilisers (122 points), oil and gas exploration companies (116 points) and power generation and distribution firms (95 points).

Engro Corporation, Sui Northern Gas Pipelines, Pakistan State Oil (PSO), Oil and Gas Development Company and Pakistan Oilfields pulled up the index, adding cumulative 406 points during the week.

According to AKD Secu­rities, performance leaders were: PSO (10.2pc), K-Elec­tric (10.1pc), Pakistan Tele­com­­munication Company (6.6pc), United Bank (6.2pc) and Engro fertilisers (6.2pc).

Laggards included Habib Bank (HBL), which went down 4.7pc, followed by Fauji Fertiliser Company (2.3pc), Pakistan Petroleum (1.6pc), Indus Motor Company (1.5pc) and Allied Bank (0.8pc).

OUTLOOK: According to Arif Habib Ltd, the market is expected to remain namby-pamby in the upcoming week as initial celebration over the Panamagate verdict may subside. Rising political noise may again generate uncertainty in the stock market. While foreign selling may keep the index under check, local players depict an incessant ability to soak such pressures.

AKD Securities predicted that the emergence of certainty on the political front post-Panamagate verdict, smooth transition to the new cabinet and continuation of the earnings season may lead to consolidation with blue-chip stocks gaining steam.

BMA Capital stated that the index can remain range-bound, although market activity is likely to stay upbeat in coming weeks. “Continuous foreign investors’ portfolio investment outflow is dragging the index performance, although domestic liquidity has been quite supportive of the market,” analysts said, adding that the result season will be in full swing next week with HBL, PSO, Pak Elektron, Engro Foods and K-Electric set to reveal quarterly results. Any major positive surprises in terms of quarterly results can act as a catalyst for another rally.

Published in Dawn, August 6th, 2017