LAHORE -  Bearish trend continued in the first three trading sessions where index lost 250 points, amid increased geo political tension; while concerns on the external account position also added to the fuel.

Last trading session observed a relief rally led by settlement between the US regulator and HBL with respect to the final penalty amount of $225 million (which is merely 36 percent of maximum penalty of $629 million). This ignited positive sentiments and helped the index to breach an all important psychological level of 41,000. Overall, KSE-100 index surged 194 points (0.5 percent) to close the week at 41,401 level. In terms of activity, ADTO went up by 25 percent WoW to land at 136 million shares whereas, ADTV surged 33 percent to $76.36 million.

Major respite came in from individual buying amounting to $10.7 million. However, foreign investors turned net sellers during the week with an outflow of $0.30 million. Additionally, mutual funds remained net sellers, with a net outflow of 11.0 million. Support services sector went up by 12.5 percent followed by health care sector with growth of 3.7 percent; individually, HBL and CPPL were major losers this week.

Terminals were flooded with pre-market Buy orders for HBL after Pakistan’s largest bank managed to settle the $630 million penalty for only $225 million. Only 5,300 shares were traded in the ready market as the script was locked shut at its upper limit of Rs160.58/share. Negotiated deals of 0.4 million shares at an average rate of Rs175/share were executed off the ready market.

On the sector front, E&P’s (+4 percent WoW) outperformed as PPL & OGDC gained 5 percent apiece on the back of rising international oil prices along with an upward revision in local wellhead gas prices. Pharma (+3 percent) was up in anticipation of hike in medicine prices. Individuals provided the market with some much needed liquidity, lapping up $10.5 million of equities while Mutual Funds dumped $11.0 million. Foreigners sold $0.3 million during the week vs selling $14.3 million last week; selling was concentrated in banks ($4.0m), while OMC’s saw $4.8 million of inflows followed by cements ($2.3m) and fertiliser ($0.8m).

During the week, HBL notified the exchange that it has reached a settlement with the New York State Department of Financial Services (NYDFS) through a Consent Order under New York Banking Law. The charges mentioned in the Notice of Hearing issued earlier are being dismissed as a part of this resolution. Under this settlement, HBL is paying a penalty of $225 million. Forman steps for voluntary closure of HBL New York Branch are underway.

During the week, Pakistan's foreign exchange reserves increased to $20.4 billion up from $20 billion during the previous week. Reserves held by SBP rose $338 million to $14.7 billion attributed to official inflows. Reserves of commercial banks rose to $5.7 billion from $5.65 billion. Drug Regulatory Authority of Pakistan (DRAP) is scheduled to increase the prices of around 10,000 medicines. Stakeholders believe that though the prices would be increased by almost three per cent, there would be an overall 15 percent hike because of the ‘cumulative effect’ under which prices of medicines having the same formula would go up by the same amount.

The National Accountability Bureau (NAB) submitted four interim references against the Sharif family and Finance Minister Ishaq Dar before the accountability court on Friday. Amid tight security, cartons full of documents from the NAB regional offices were ushered into the Islamabad Accountability Court amid much media hype as the Supreme Court's deadline expires today. NAB spokesperson Nawazish Ali told media persons that all the references have been accepted for trial and nothing has been sent back.

Prime Minister Shahid Khaqan Abbasi has set up a Cabinet Committee on China-Pakistan Economic Corridor for the implementation of the strategic $55 billion project, completely overhauling the existing institutional arrangement and bypassing the planning ministry. The move will further consolidate the premier’s grip on power. He has already taken complete control of all cabinet committees dealing with economic matters. The new arrangement suggests that every important decision on concerning the economic and development of the country will have to be initiated or decided on by the premier himself.

Bank of Punjab (BOP) approved the issuance of Tier-II capital in the form of subordinated Term Finance Certificates to an extent of Rs5.0 billion in order to further strengthen capital base of the bank. The issue is subject to regulatory approvals. Crescent Steel (CSAP) has issued a 12 month Commercial Paper of Rs719.5 million at a discount to face value via private placement at a pricing of 6-month Kibor +1.35 percent. The said issuance is to meet the working capital requirements of the company.