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Oil-led rally helps index scale new peaks

KARACHI: The Pakistan Stock Exchange (PSX) retained its status as the fastest growing market in Asia in the outgoing week with 11 consecutive sessions of winning streak that propelled the KSE-100 index by a massive 3,313 points (7.53 per cent) to settle at 46,585. The index has yielded a return of 9.3pc in December to date.

In the outgoing week, the KSE-100 index gained 1,197.30 points (2.64pc) with major contribution to upside coming from Pakistan Petroleum up 13.31pc, POL 13.35pc, HUBC 7.97pc, OGDC 6.49pc and HBL 2.69pc, which together added 683 points to the index.

Oil-supported KSE-100 index continued the stellar run during the week with a positive closing in each of the four sessions. The flight of the index was fuelled by all-round positive sentiments.

Investors were enthused following the recovery in global oil prices after the agreement reached on supply cut among oil producing countries. As the political uncertainty over Panama Papers peter out for the time being, investors awaited the textile package and process of PSX stake sale commenced which prompted investors flush with liquidity to take fresh positions in several heavyweight sectors.

A key negative development during the week was the increase in interest rates by US Federal Reserve. Moreover, the gas price reduction for industrial consumers was withdrawn on Friday putting pressure on textile stocks in the last trading session of the week.

Dealers at Topline Securities identified three top winning sectors during the outgoing week as oil and gas exploration, pharmaceutical and power generation companies, which were up 9.8pc, 5.1pc and 3.1pc, respectively. While top losers were fertiliser, cement and food and personal care products, which declined by 2.5pc, 1.4pc and 1pc.

According to AKD Securities, major gaining stocks during the week were: POL 13.4pc week-over-week, PPL 13.3pc, MEBL 11.1pc and SNGP 10.2pc; while laggards included: AGTL 7.3pc, FATIMA 4.1pc, FFBL 3.8pc and LUCK 2.6pc.

Average daily volumes for the outgoing week declined 9pc over the earlier week to 358m shares while average daily value increased 7pc to Rs20 billion as the investors’ interest shifted to large-cap stocks from second- and third-tier stocks.

Foreign selling intensified during the week amounting to $46.8 million, up from $24.8m worth of sell-off last week, all of which took the FIPI outflow for Dec to date at $80.9m. Oil and gas exploration, cement and banking sectors saw major net foreign selling of $20.8m, $6.3m and $4.4m, respectively, while buying was seen in chemical sector worth $1.1m. Foreign selling was absorbed by local participants, mainly the mutual funds to the tune of $29.1m and companies $20.6m.

OUTLOOK: Most analysts looked forward for the market in the upcoming week with guarded optimism. “Caution” was the key word floating around. However, many visualised the current bullish fervour to continue.

“Despite continuous foreign selling, the benchmark index continues to reach new highs; local participation remains imperative for future performance of the index. Interest is likely to continue in E&P with steady uptick in oil prices amid Opec deal”, said analysts at BMA Capital Management, but cautioned: “Textile sector and select industrial scrips are expected to remain under pressure in the coming week due to the reversal of gas price reduction”.

Courtesy : Dawn News

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