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Stocks extend bullish run

KARACHI: The stock market extended the winning streak for fifth week in a row, notching up gains of 848 points (2.11 per cent) and storm past the physiological barrier of 40,000 to close at 50-session high of 41,113.

The week’s upsurge took the 2019 year-to-date return to 10.9pc. The rally was underpinned by the preceding week’s economic reforms package that went to favourably impact the market; the cash deposit from UAE and Saudi Arabia of $1 billion each were looked upon as the government’s measures to deal with the external debt and current account deficit.

Foreigners’ buying continued for the second consecutive week but local participants generally remained on the sidelines as the week marked the last session of January with rollover of the future contracts; the announcement of State Bank monetary policy, stipulating a surprise 25bps hike in discount rates which raised it to 10.25pc; the Federal Cabinet approving the issuance of “Pakistan Banao Certificate” to raise $500 million; and Power Division permitted to mobilise Rs200bn to reduce circular debts.

Foreigners continue to find the local market attractive with net weekly purchases of $12.3m, adding to the year-to-date net buying of $19.7m. Activity of foreign funds was concentrated in commercial banks which witnessed inflows of $7.68m, E&P $1.65m and cement $1.28m.

The average daily traded volume stood higher by 3.8pc over the earlier week to 174.84m shares, while the average traded value declined by 5.8pc to $49m. Sector-wise, commercial banks contributed 238 points during outgoing week on back of a hike in policy rate and automobile assemblers added 83 points.

Market gurus visualise the upcoming week with cautious optimism. In the absence of strong triggers and lack of clarity on International Monetary Fund front continuing to persist as the decision to enter a program may be put off owing to immediate funding availed from UAE and Saudi Arabia,investors may be inclined to wait and watch before taking fresh positions.

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