LAHORE - The KSE 100-index of Pakistan Stock Exchange extended its gains to close 2 percent WoW higher at 42,913 points as sentiments remained positive on smooth transition from current government to caretaker set-up during the week.

Nasir-ul-Mulk, a former Chief Justice of Pakistan, was named as caretaker prime minister for a period of two months to hold general elections on July 25. The index gained as key sectors such as oil & gas marketing (+2.1% WoW), fertilizers (+1.5% WoW), banks (+1.8% WoW), and power sector (+1.2% WoW) closed in green. Banks posted gains as the State Bank of Pakistan (SBP) increased policy rate by 50bps to 6.50% on account of growing external account pressures ahead. Trading activity also recovered during the week as average value traded jumped 13pc WoW to $48m. On the other hand, average daily traded volumes clocked in at 119m shares, down 0.4pc WoW. With the month ending, FBR posted revenue collection numbers for May-2018, which reflected a shortfall to government's target. Revenue collection for 11MFY18 stood at Rs3,274b, up 15pc YoY. Moreover, the government also announced extension of export package for another three years. SBP's foreign exchange reserves as at May 25 once again posted a decline, reaching $10b. However, some foreign support for foreign exchange reserves is expected to continue as (1) World Bank is reported to give $400m for green projects in Punjab and (2) China has stated to roll over $500m loan that expires in Jun-2018.

Experts said that for the second consecutive week, Pakistan equities returned around 2% to investors, where four out of five sessions closed positive. Investors’ confidence improved in the market post finalisation of care taker PM in a smooth way. Later, ease down in global political noise (especially Italy crisis) further garnered investors sentiments, and helped market to close at 42,913 points, gaining 839 points in a week. To note, macro concern is still dampening on investors sentiments.

Attock Refinery (ATRL) and National Refinery (NRL) remained among top performers during the week, where both gained around 24% and 17% respectively in their values amid attractive valuation and restoration of FO supplies to power plants in Pakistan.

Searle Pakistan (SEARL) gained around 12pc during the week, as news was floating in market regarding build up of position by Milan based asset manager in SEARL. Foreigners were net sellers during the week amounting to $17.5m vs net selling of $26.1m last week. On the other hand, amongst local investors banks were net sellers of $4.7m whereas insurance were net buyer of $30.4m.

During the week, Pakistan Petroleum Limited (PPL) notified exchange regarding extension for further one year w.e.f from May 31, 2018. Bestway Cement (BWCL) notified exchange that company’s new line of clinker (6000 tpd) has successfully commenced operations.

The outgoing federal government decided to keep prices of petroleum products maintained for the month of June, rejecting a summary of hike in prices by Oil and Gas Regulatory Authority (OGRA). Earlier OGRA sent a summary to the power division, recommending hike of Rs8.37 per litre in petrol prices, while an increase of Rs12.5 per litre in diesel prices is recommended.

The strengthening of the dollar amid Federal Reserve interest rate hikes has sharpened pressure on some emerging economies as investors steer funds to the United States.

Funds dedicated to emerging economy equity and debt saw withdrawals of $569 million and $253 million during the week of May 23, according to data firm EPFR Global. That is on top of the $1.6 billion and $2.1 billion taken from the same funds during the week ending May 9.