The uptick was seen at local bourse during the outgoing week as investors took interest in index heavy banking and oil sector stocks. The benchmark KSE-100 index increased 3.8% over the week to close at 32,479 index level. Average daily volume increased 24% to 144.3mn shares and average daily value rose 22% to Rs8.5bn/US$81.4mn.

Over the week, Commercial Banks, Financial Services and Pharma & Biotech sector increased by 7.2%, 4.8% and 4.6%, respectively. Decline was seen in Beverages, Tobacco and Forestry sector, which were down 7.8%, 7.4% and 3%, respectively.

Foreigners were net sellers of US$2.2mn during the week. Cement sector witnessed net buying of US$6.0mn while Banks and Oil & Gas Exploration sector experienced net selling of US$7.1mn and US$4.8mn respectively during the week.

Experts said that Market sustained the bullish momentum gained during last week and posted an impressive return of 4.1% WoW to close at 32,479 pts. Investors welcomed status-quo in the Monetary Policy Statement (MPS) and across the board rally was observed in the index heavyweight banking sector throughout the week as fears of further contraction in NIMs fizzled out. In addition,  whispers of Russia agreeing to come to the table with Saudi Arabia to decide the fate of oil prices helped spark recovery in the international crude oil prices which in turn provided some respite to another heavyweight, the E&P sector (+2.5% WoW). Encouragingly, overall participation also increased with average traded volumes for the week clocking-in 30% WoW higher at 144mn shares/day. Other important highlights of the week were (1) IMF’s nod of approval for US$500mn tranche, (2) imposition of final anti-dumping duty on PSF imports from China, (3) cut of Rs5/litre in petrol prices, (4) inauguration of Gwadar-Turbat-Hoshab (M8) motorway by the PM, (5) higher than consensus CPI inflation numbers for the month of Jan-16 (+3.3% YoY) and (6) Moody’s nod of approval for Pakistan’s new MPS framework.

According to experts, the board of directors of Engro Fertilizer Limited is scheduled to meet on Feb 08 2016 to consider the financial results for the year ended CY15. It is expected the company to post earnings of PKR15.0bn (EPS: PKR11.3) for CY15 as compared to PKR8.2bn (EPS: PKR6.2) reported in the same period last year, representing a growth of 83%YoY. The growth in earnings is primarily attributable to i) award of concessionary gas pricing at the Enven plant in 1QCY15, ii) 43%YoY higher revenue courtesy inclusion of DAP trading business in EFERT and iii) 29%YoY decline in finance cost due to lower DR and deleveraging. On a sequential basis, earnings are expected increase by 84% to clock in at PKR5.0bn (EPS: PKR3.8) in 4QCY15 compared to PKR2.8bn (EPS: PKR2.1) owing to 2.6xQoQ higher revenue due amid sharp increase in offtake of both Urea and DAP. The result is also expected to accompany a final cash dividend of PKR2.5/sh, taking cumulative CY15 payout to PKR5.5/sh. At our current target price of PKR98/share, the scrip currently offers a total return of 31%.  

After the conclusion of 10th review under International Monetary Fund (IMF) Extended Fund Facility (EFF), the fund will be releasing the tranche of US$497mn after board approval. An e-mail statement from IMF outlined that weak cotton harvest, declining exports and challenging external environment are factors that are weighing on Pakistan’s growth prospects. However, lower oil prices, planned improvements in energy supply, investment related to China Pakistan Economic Corridor (CPEC), buoyant construction activity and increased credit growth will bode well for the country’s economic growth. Post-IMF talks, the fund said that it has not set a deadline on the privatization of Pakistan International Airlines (PIAA) in light of recent events.

As per a PSX notice from Oil & Gas Development Company (OGDC) and Pakistan Petroleum (PPL), there has been a discovery of 1,032 barrels/day of crude oil and 0.8mmscdf of gas from Nashpa X-5 field in KPK province. OGDC has 56% working interest while PPL has 28.6% interest in the field.

In the T-bill auction held on Friday, govt raised Rs319.9bn against target of Rs350bn. The cut-off yields increased by 5-9 bps as 3-month T-bill settled at 6.25% (amount accepted Rs169.4bn), 6-month T-bill settled at 6.26% (amount accepted Rs56.7bn) and 12-month T-bill settled at 6.27% (amount accepted Rs93.8bn).