KARACHI: The stock market stayed bullish in the first week of the new year mainly because the government tabled Finance (Supplementary) Bill 2021 and SBP Amendment Bill in the national assembly ending the uncertainties about the resumption of the IMF loan programme.

Moreover, the month-on-month decline in trade deficit in December and the appreciation of the rupee against the US dollar further improved the sentiments of the investors. As a result the benchmark KSE 100 index posted a gain of 750 points or 1.68 per cent week-on-week to close at 45,345.65.

According to AKD Securities Ltd, the average volumes stood at 318m shares in the outgoing week compared to 218m shares in the previous week, indicative of fresh allocations associated with beginning of the new year.

Major news inflows during the week including the Federal Board of Revenue’s collection jumped by 18pc month-on-month to Rs600bn in December 2021 and year-on-year rise of 32.5pc to Rs2.92 trillion. Inflation clocked in at 12.3pc for December 2021, furnace oil offtake from refineries improving with IPPs placing orders of 250,000 tonnes for January alone, cements despatches recorded at 4.6m tonnes in December against 4.8m tonnes in the same period last year.Foreigners’ net buy stood at $24.1 million whereas excluding gross buy of $26.0m which is likely to include strategic buying by TRG of its shares, the group stands as a net seller of $1.9m. On the local side, individuals stood on the selling side with a net sell of $15.1m followed by mutual funds with a net sell of $8.4m, which is likely to include contra position of TRG transaction, whereas banks turned out to be on the other side of the spectrum with a net buy of $7.0m.

According to Arif Habib Ltd (AHL), the sector-wise contribution to the upside was led by fertiliser (212 points), power generation (159 points), commercial banks (146 points, oil and gas exploration (111 points), and engineering (41 points). Scrip-wise major gainers were The Hub Power Company (163 points), Systems Ltd (94 points), POL (85 points), EFERT (76 points), and FFC (59 points).

Going forward, the AHL expects the market to show positivity in the upcoming week attributable to successfully achieving vaccination targets, meeting with IMF scheduled on Jan 12 in which completion of review would result in disbursement of SDR 750m ($1,059m) and expectation of healthy corporate profitability during the outgoing quarter particularly across cyclical sectors should keep sentiments positive.

However, rising cases of Covid-19 (fifth wave of coronavirus) and current macroeconomic concerns like rising imports, and higher inflationary reading due to increasing prices of commodities could keep the market range-bound.

Published in Dawn, January 9th, 2022