Pakistan Stock Exchange (PSX) witnessed bullish trend during the first week of new year mainly due to local investors and institutional support as the benchmark KSE-100 index registered a healthy increase of 1,231.26 points to close at highest ever level of 49,038.23 points during the week ended January 06, 2017.
Trading activities also improved significantly as average daily trading volumes on ready counter increased by 42.8 percent to 408.34 million shares as compared to previous week's average of 285.91 million shares. Average daily trading value also increased by 43.8 percent to stand at Rs 21.27 billion. Total market capitalisation surged by Rs 167 billion or 1.7 percent to Rs 9.795 trillion.
The foreign investors remained net sellers of shares and withdrew $2 million from Pakistan stock market during the week as compared to $18 million withdrawn in the preceding week. Major foreign selling was witnessed in E&Ps ($6.86 million), Cement ($2.88 million), Food and Personal Care Products ($1.49 million) and Textile Composite ($0.44 million) along with other sectors ($1.83 million).
Syeda Humaira Akhtar at JS Global Capital said that steady flows from both local and foreign investors were witnessed during the week, particularly in blue chips. Steel sector remained in the limelight, gaining 7.0 percent during the week, following announcement by Dost Steel notifying commencement date of its operations as of May 2017 while Amreli Steel gained on the back of rumours of significant discounts driving healthy volumes for the company. Cement sector surged 2.0 percent in anticipation of increase in prices in North region by Rs 15-20/bag while expectation of healthy off-take numbers for December 2016 attracted investors' interest in fertilizer sector (up 7.0 percent). National Refinery (NRL) gained traction, during the week, post announcement of 50 percent reduction in financing requirements for its Isomerization and Desulphurisation project owing to better cash flow position of the company.
Shahbaz Ashraf, head of research at Arif Habib Limited said that trading at the local bourse commenced on a positive note in the first week of 2017; locals (mutual funds and NBFC) played a key role in directing the market towards new heights by a cumulative 1,231 points to close at a record high of 49,038 levels. While slight volatility was observed during mid-week amid the Panama-gate hearing by a new bench of apex Court, which eroded 123 points from the index, the market showed no signs of weakness given sufficient liquidity available with locals and high investor confidence.
Contribution to the index came from Fertilisers (392 points), Commercial Banks (244 points), E&Ps (122 points), OMCs (85 points) and Cements (85 points). Rally in the fertilizer sector was led by FFC (131 points), ENGRO (118 points) and EFERT (61 points) in anticipation of healthy fertilizer off-take in the coming month. Similarly, UBL and HBL contributed 84 and 78 points respectively on the back of attractive valuations and robust result expectations. Additionally, contribution from E&Ps and OMCs can be owed to surge in oil (WTI) prices to July 2015 levels of $55/barrel.
An analyst at AKD Securities said that welcoming the New Year, as it ended the last, the KSE-100 index continued its climb, resting higher by 2.58 percent on week-on-week basis, closing the week at 49,038 points. Exercising of pricing power by cements, expectations of turnaround in margins for steels, expectations of the textile policy and the Supreme Court's move to re-examine beneficial owners of holding companies, helped boost a broad based rally.
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