Uptrend continues

Pakistan Stock Exchange (PSX) witnessed bullish trend during the outgoing week and despite hefty foreign selling the benchmark KSE-100 index increased by 1197.30 points or 2.6 percent to close at new high level of 46,584.53 points.
The foreign investors remained sellers of shares and withdrew $47 million from Pakistan stock market.
Trading activities at the local bourse remained low as average daily volumes on the ready counter decreased by 9.0 percent to 357.58 million shares as compared to previous week's average of 392.87 million shares. Average daily trading value however increased by 7.5 percent to Rs 19.91 billion. Total market capitalisation surged by 206 billion or 2.3 percent to Rs 9.332 trillion.
An analyst at JS Global Capital said that the KSE-100 index continued to trend up in spite of unabated foreign selling ($47 million sold during the week). Most of the strong rally in the stocks can be attributed to continued interest from local mutual funds as their buying spree continued during this week as well ($29 million bought during the week). Individuals, on the other hand, remained skeptical of index levels and continued to book profits at fresh highs recorded during the week. Key sectors, which garnered attention during the week were Oil & Gas Exploration (+9.8 percent due to increasing oil prices), Commercial Banks (+2.9 percent on expectations of interest rate hike in the near future), and Pharmaceuticals (+5.1 percent). Other heavyweights such as Cements (-1.4 percent) and Fertilisers (-2.5 percent) witnessed correction during the week. US FED's decision to increase interest rates which came in during the second half of the week was largely a non-event for the bourse as overall growth theme in the backdrop of China Pakistan Economic Corridor (CPEC) remains intact. Other important news during the week were Prime Minster's call to boost exports by 30 percent to support balance of payment, offer by Germany-based Siemens of $2.5 billion credit facility for TAPI pipeline and release of trade deficit numbers for the month of November 2016 (+14 percent during the month and +20 percent in the first five months of FY17.
An analyst at AKD Securities said that the KSE-100 continued to set fresh records this week as well with the index closing at an all time high of 46,585. This bullish performance was led by calming political uncertainty over Panama paper and strong oil prices post deal with Non-OPEC producers propelling gains in the index heavy Oil & Gas sector (+7.8 percent).
The BIPL weekly research said that oil-supported index continued the stellar run with a positive closing in each of the four sessions of this relatively short week. Already trading at an all-time high, index set yet another record high fuelled by positive sentiment surrounding the market. Successful proceedings of bidding process for divestment of PSX along with the increase in oil prices after the OPEC meeting proved to be a strong stimulus. Most gains, during the week, were posted by the E&P sector (biggest beneficiary of an increase in oil prices). Depreciating Yen (2.3 percent) bodes well for margins of the automobile sector hence the sector posted positive returns during the week. The PSMC emerged among the top gainers as it announced its plan to set up a new plant if government agrees to provide similar concessions that are being provided to new entrants.