Despite threats from various fronts, the benchmark KSE-100 share index displayed a buoyant trend during the outgoing week. The bourse touched new heights and crossed the 43,000 mark again on the back of strong liquidity position of local investors.
The rally came mainly due to rekindled interest of investors in oil and cement.
The Organization of Petroleum Exporting Companies (OPEC) is likely to discuss prospective production cuts in its next meeting. The news fuelled volatility in the international crude oil prices, leading investors into taking fresh bets in the sector.
Moreover, the index enjoyed northbound movement due to positive sentiment in the cement sector supported by receding coal prices. Resultantly, the KSE-100 share index gained 675 points or 1.6% to close at its all-time closing high of 43,000 points.
The week started off with looming threats of rising strain between India and Pakistan amidst sporadic episodes of confrontation across the LoC. Concerns pertaining to the outcome of Supreme Court’s investigation of the Prime Minister and his family in the Panama leaks case further added to the tension. The first two days on the bourse were volatile but closed in green with substantial gains in all major sectors.
The local market displayed notable rally on the third day of the week underpinned by expected multiple rerating due to MSCI upgrade. The last two days of the week closed almost flat with range-bound trading witnessed during the day. The index meandered between green and red as speculations regarding reduction in gas prices and the lower locks in Sui twins created rife on the bourse.
Overall, the benchmark KSE-100 share index remained in green for all five days. According to the estimates provided by analysts, after the MSCI upgrade of the local bourse, the index was likely to breach the 42,000 mark by the end of this year. However, it not only surpassed the expectation by projecting 43,000 points but also, it did so one month before the given time.
“We see potential re-rating of the index on account of CPEC [China Pakistan Economic Corridor] and MSCI Emerging Market theme,” said Tahir Abbas, Assistant Vice President Investment Research at Arif Habib Limited. He added that currently the index is trading at 2017 price to earnings ratio of 9.0x, which is 34% discounted to regional peers. “Going forward we foresee market multiple to re-rate and this discount shall narrow down,” Abbas said.
China remained the equity leader with best performance during the week. It gained 2.16% followed by Thailand and Pakistan with 1.8% and 1.5%, respectively. The Indian, Vietnamese and Malaysian markets also closed in green with 0.6%, 0.3% and 0.2% gains, respectively. However, the equity markets of Indonesia and Sri Lanka traded in red.
Top three gainers over the outgoing week were Cements, Oil and Gas Exploration Companies and Food and Personal Care, up 4.7%, 3.7% and 3.5%, respectively. However, top three losers were Automobile Assemblers, Banks and Technology and Communication declining 1.1%, 0.9% and 0.6% respectively.
Leaders during the outgoing week included Nishat Chunain Limited (+18.88%), Nishat Mills Limited (+1226%), Hascol Petroleum Limited (+7.66%), Amreli Steels Limited (+7.39%) and Engro Polymers and Chemicals Limited (+6.46%).
Laggards included Sui Southern Gas Company Limited (‐6.00%), Meezan Bank Limited (‐3.43%), Indus Motor Company Limited (‐2.12%), Askari Bank Limited (‐1.96%) and Habib Bank Limited (‐1.89%).
Average daily volumes for the outgoing week posted an increase of 4% week-on-week to 475 million shares while average daily value increased 10% week-on-week to Rs 15 billion or $147 million during the outgoing week.
Volume rankings continued to be occupied by second tier scripts namely Pace Pakistan Limited (173 million), Bank of Punjab (145 million), Pakistan International Airlines (139 million), Summit Bank Limited (132 million) and Azgard Nine Limited (77 million).
According to AKD Securities, the market is expected to remain volatile during the upcoming week taking direction from the Supreme Court’s hearing on Panamagate case, and OPEC meeting to finalize output deal on oil prices. Additionally, the recent trend of rising coal prices may keep cements under pressure with textiles expected to remain in limelight upon expected announcement of the export incentive package.
The Pakistan Stock Exchange’s market capitalization stood at Rs 8.7 trillion ($83.5 billion) at the end of the week.