The local equities continued upward momentum amidst chronic volatility originating from crude oil prices and foreign selling. Unabated foreign selling of foreign funds and investors has continued off late owing to massive redemptions in the frontier market funds. Remarkably, locals have continued to absorb this selling despite sentimental concerns over SECP investigations against some brokers and investors.

Second last trading session of the week remained an encouraging one with foreign investors finally turning net buyers in the market, providing impetus to overall participation in the final session. Resultantly, activity remained lackluster and overall concentration tilted towards mid and small cap stocks in the better half of the week with average volumes (187m shares, up 13% WoW) and average traded value (Rs9.14b, down 1.5% WoW) declining. Of the key sectors, interest in pharmas, cements, IPPs, oil & gas, banks and foods remained alive with banks underperforming the benchmark post CPI announcement which incited fears of further rate cut in the upcoming MPS announcement. Other important highlights of the week were: successful conclusion of IMF-Pak talks in Dubai, likely discontinuation of Guddu gas for EFERT, impressive cement numbers, CPI inflation clocking-in at 1.6% YoY and hike in MS and HSD prices.

Despite continuous foreign selling and lack of any market trigger during the outgoing week, KSE-100 index closed up marginally by 0.5% WoW to close at 34,427 index level. Foreigners were net sellers in the outgoing week with selling of $10.2m. Major selling by foreigners was seen in textile ($12.7m) and banking (US$5.7m) sectors. Local mutual funds and companies were major buyers during the week with buying of $12.7m and US$7.4m, respectively.

At sector level, real estate investment, forestry, general industries, electricity and tobacco gained 4.2%, 3.9%, 3.6%, 2.4% & 2%, respectively. While major losers were media, beverages, personal goods & chemicals, falling by 5.8%, 4.6%, 1.6% & 1.3%, respectively.

The International Monetary Fund (IMF) cleared the next installment of $502m under Pakistan’s bailout package by mid-Dec 2015. The IMF mission chief Harald Finger said despite challenges, economic activity continues to improve in Pakistan and real GDP is expected to grow by ~4.5% in FY16.

According to the auction calendar released by the State Bank of Pakistan (SBP), the central bank plans to raise Rs1.3 trillion through T-bills and Rs200b through Pakistan Investment Bonds (PIB) in the period from Nov 2015 to Jan 2016.

Minister of Petroleum & Natural Gas, Khaqan Abbasi has informed that gas supply from Engro Fertilizer (EFERT) will be diverted to the Guddu power plant in Dec 2015 this year in order to increase electricity production from the plant. EFERT will be provided gas from other sources to meet its needs.

As per a KSE notice, Pakistan Petroleum (PPL) has opted for conversion of 18 concessions (land allotted for exploration) to the Pakistan Petroleum Exploration & Production Policy, 2012. As a result, pricing mechanism of gas, produced from any new discoveries will be based on 2012 petroleum policy. The conversion is being done for concessions that are solely operated by PPL and also the ones in which it is a joint venture partner.

Fauji Fertilizer (FFC) has informed through a KSE notice that the board of directors has approved equity participation in a Joint Venture Company (JVC) to be incorporated as a Special Purpose Vehicle (SPV) in Tanzania for setting up a fertilizer plant. Ferrostaal Industrial Projects GmbH (FIP) and Haldor Topsoe A/S (HTAS) will be part of the consortium.

Pakistan and IMF have reached a staff-level agreement on the ninth review of IMF’s US$6.6bn Extended Fund Facility (EFF). IMF Executive Board will now meet mid-December 2015 to consider disbursement of US$502mn to Pakistan.

The successful completion of the review comes as a key positive ahead of the board meetings of World Bank (Nov 12th) and Asian Development Bank (Nov 21st), where they are expected to approve disbursement of US$500mn and US$400mn respectively to Pakistan.

IMF has lowered inflation expectation for FY16E to 3.7% YoY, where the Fund expects inflation to increase to 4.5% YoY by June 2016. IMF predicts GDP to grow by 4.5% in FY16E vs. government’s target of 5.5%. The staff-level talks between Pakistan and IMF were extended by a day, as IMF voiced concerns on missed (1) net domestic assets (NDA), (2) fiscal deficit and (3) tax revenue performance criteria.