Corporate results season continued to drive investors’ interest as KSE 100-index increased by 1.3 per cent week-on-week (WoW) to close at 36,223 points level. Average daily volumes decreased 27 per cent WoW to 295m shares, while average daily value increased 5 percent WoW to Rs13.5b/$133m.

The Karachi Stock Exchange (KSE) continued its bullish momentum gaining 481 points (1.3 percent) during the week. The bourse closed slightly below its all time high at 36,223. The index rallied on the back of World Bank’s assistance offer worth $2b, (2) anticipated healthy corporate results announcements in the ongoing results season and soft inflation numbers for July 2015. Lower than expected CPI once again built expectations of another cut in the policy rate, improving the prospects for leveraged companies as MLCF and PAEL gained 7.3 per cent and 8.6 per cent respectively during the week. Volumes for the week declined by 27 per cent WoW. Foreigners remained net buyers worth $4.8m during the week. Other key highlights of the week were (1) SBP cut refinancing rates by 150bps, (2) IMF talks were held for the 8th review, (3) Govt revised NSS profit rates upwards, (4) Forex reserves hit all-time high of US$18.82bn and (5) Auto policy was tabled for approval by ECC.

According to the data published by SBP, total deposits of the scheduled banks grew by a healthy 10 percent during 1HCY15 to Rs9.1 trillion, much in tandem with M2 growth of 9 percent. On a MoM basis, deposits grew by 3 percent during Jun’15.

Advances to deposits fell by 3pps to 50 percent due to seasonal retirements, especially from textile sector. During 1HCY15, advances of the scheduled bank witnessed minimal growth of 3 percent to PKR4.6trn.

Despite falling yields on govt backed investment papers, banks parked most of the liquidity in investments due to lower credit demand. Total investments by the banks, during 1H, grew by healthy 14 per cent to Rs5.8tr while investments to deposits increased by 3pps to 64 per cent. Affinity of the banks during 1H was inclined largely towards MTBs as portfolio was already heavily weighted by PIBs.

Cumulatively during FY15, deposits of the scheduled banks grew by 13 per cent compared to FY14 growth of 10 per cent. Investments witnessed healthy growth of 33 per cent while advances growth remained on the lower side, clocking in at 7 per cent.

Major gain was seen in pharma and bio tech (8.4 per cent), construction and materials (6.1 per cent) and automobile and parts (4.8 per cent), while major decline was witnessed in real estate investment and services (1.7 per cent), tobacco (1.5 per cent) and relecommunication (1.2 per cent), during the outgoing week.

During the week, local mutual funds and foreigners were net buyers of $10.5m and $5m respectively. However, individuals and banks were net sellers who sold shares worth $14.7m and $1.4m respectively.

Major net buying by foreigners during the week was seen in sectors like chemicals ($10m), oil and gas ($3m), and banks ($2.8m) while major net selling was seen in cements ($7.6m).

During the week, policy-level talks with the International Monetary Fund (IMF) under the mandated 8th quarterly review of $6.64bn Extended Fund Facility (EFF) successfully concluded in Dubai.

In T-bill auction held on Aug 05 in which govt raised Rs340.7b against the target of Rs225b. Cut-off yields remained flat as 3-month T-bill settled at 6.93 percent (amount accepted Rs32.0b), 6-month T-bill at 6.95 per cent (amount accepted Rs173.9b) and 12-month T-bill at 6.95 percent (amount accepted Rs135.7b).

Profit rates on National Saving Schemes (NSS) have been increased by 25-92bps effective Aug 1, 2015. Profit rate on Defense Saving Scheme (DSS) is now 9.2 per cent, Regular Income Certificate (RIC) 8.5 per cent while Bahbood Saving Certificate (BSC) is 11.0 percent.

Pak Suzuki Motor Company (PSMC) announced 2Q2015 earnings of Rs1.5b (EPS Rs17.9) against Rs0.6b (EPS Rs7.2) in the same quarter last year. This result was above market consensus estimates.

Ministry of Industries and Production informed the Senate Standing Committee of Industries and Production that it has tabled the much awaited automobile policy to the Economic Coordination Committee (ECC) for its formal approval.