New Year: bulls still in control

After a bumper 2016, the bulls have taken control during the first week of the new-year as well. The benchmark KSE-100 index gained 2.6 percent and closed at 49,038 points.

However, the index leadership saw a change of hands as fertilizers contributed the most points. Activity in fertilizer stocks picked up as urea off-take numbers came above expectations. Investors and analysts are of the view that inventory accumulated by the fertilizer sector would be sold off by the end of first quarter which would take the sector back to routine profitability.

In addition to the fertilizer sector, the MSCI names such as ENGRO, UBL and HBL also contributed towards the index surge. Banking stocks rallied as deposits and advances data released by SBP was above expectations. Analysts were not expecting such robust growth in deposits and M2 supply during low interest environment.

Apart from the main board auto, cement and steel sector witnessed good volumes. Auto sector activity starts increasing during the first week of every month as investors and traders pick their stocks ahead of the auto sales data which usually released on the 10^th of every month.

Cement and steel sector also saw a lot of activity as rumours of end-user price increase in both sectors started floating around the market during mid-week. No official word on the price increase has been heard yet.

On the investment flow side, foreign selling continued but at a slower pace compared to previous weeks. Mutual funds and banks were the major net buyers supporting the market again. Interestingly, institutions have been ignoring the proceeding of the panama scandal.

The individuals on the other hand, looking at their investment pattern during the week, are following the court proceedings and basing their investments on news flow.

Technically speaking, the bullish trend is likely to continue towards 49,900 points where the index will face some resistance. On the downside, 48000 is the level where the index is likely to find good support. Overall the index will remain in bullish zone until it breaches 46,400 points.