Ignoring recent political tension between Pakistan and India, the KSE-100 index resumed its solid bullish momentum during the outgoing week to set new highs primarily led by index heavy weights - auto, oil and banking sector stocks - on higher international oil prices and SBP decision to keep interest rate unchanged, analysts said.
The benchmark KSE-100 index surged by 759.87 points or 1.91 percent on week-on-week basis and closed at the highest ever level of 40,541.82 points from last week's closing of 39,781.95 points.
However, trading activities remained low during the week, as average daily volumes for the outgoing week decreased by 27.4 percent on week-on-week basis to 528.26 million shares as compared to 727.76 million shares last week. Average daily trading value fell by 14.0 percent to Rs 15.08 billion ($144 million) during the week. Total market capitalisation increased by Rs 123 billion to Rs 8.223 trillion.
Automobile Assemblers were the top gainer over the week, up 7.7 percent, followed by Oil and Gas Exploration and Commercial Banks, which increased by 1.9 percent and 1.3 percent respectively. Power Generation and Distribution sector emerged as the top loser as it fell 0.5 percent. Foreigners were net sellers of $8.6 million during the week.
During the week, volatile activity at the local bourse largely reflected an escalated tension between Pakistan and India, an analyst at Topline Securities said.
"The market ignored situation at Pak-India boarder and the KSE-100 index resumed its solid bullish momentum during the week," an analyst at AKD Securities said. The rally was primarily led by index heavy weights Oil space (+1.9%WoW) on higher international oil prices (Brent: +4.2%WoW) and SBP decision to keep interest rate unchanged, he added.
An analyst at JS Global Capital said that the bulls remained active throughout the week with the KSE-100 bouncing back above 40,000 levels despite mounting tensions between India and Pakistan at the borders. India claimed conducting 'Surgical Strike' near AJK on Wednesday night where the same was strongly rebutted by Pakistan as another episode of LOC skirmish. On Thursday, the market started on a positive note but gains seen at the start of the session reversed once news of LOC firing between the two neighbours gained traction, stimulating skeptics to liquidate their positions which took market into the red zone. The index, however, recovered quickly once officials refuted Indian claims of 'Surgical Strike'. On the last trading session, bulls took charge with broad based activity into both third tier and blue chips.
"While tensions escalated at the political front amid emerging details of the Pak-India confrontation, the market shook off the negative sentiment (barring the slight glitch mid-week), ending up 1.9% to close at 40,542 levels," an analyst at Arif Habib Limited said. Support to the market was led by the banking scrips given status quo policy decision by the SBP and attractive valuations instigated a bullish run (MCB, HBL and UBL contributed 90, 31 and 29 points to the index). While launch of the new Hilux Revo and second generation Toyota Fortuner stirred price performance of INDU, intandem other auto scrips also witnessed a jubilant week at the index (PSMC and INDU contributed a collective 79 points in the outgoing week). Similarly, E&P scrips responded positively to the upsurge in oil prices (albeit, final decision related to production cut by OPEC members); PPL and POL made a contribution of 43 and 31 points, respectively. Textile sector also remained in limelight owed to an expected 6 percent rebate on local taxes and further reduction in LTFF on the import of machinery for export oriented sectors (+61 points contributed by NML and KTML).