LAHORE - The benchmark KSE-100 index posted an upbeat trend in the outgoing week, as the local bourse touched new highs.

Positivity was seen on the back of factors such as record high utilisation levels posted by cement manufacturers and strong liquidity position of local investors. KSE-100 index posted an all time high consecutively for the fifth day, during the outgoing week. Resultantly, the index gained 2,116 points (4.9%) over the week to close at all time high of 45,387 points, breaking the 45,000 barrier.

Average daily volumes for the outgoing week posted a decrease of 3 percent WoW to 393 million shares, while average daily value increased 23 percent WoW to Rs19 billion/$177 million over the week.

Top three gainers over the outgoing week were Cement, Oil and Gas Exploration Companies and Commercial Banks sectors, which were up 11.4 percent, 6.7 percent and 4.1 percent respectively. While top losers were Textile Weaving, Refinery, and Tobacco, which declined by 10.3 percent, 1.6 percent and 1.4 percent respectively.

Foreigners remained net sellers of $24.9 million during the week. Oil and Gas Exploration, Cement and Textile sectors saw major net selling of $9.7 million, $4.6 million and $2.7 million respectively, while buying was seen in Oil and Gas Marketing of $3.5 million.

In its PSX notice, Fauji Cement Company (FCCL) announced approval of a Waste Heat Recovery Power Plant for line-1 Wartsila Captive Power Plant. This is likely to reduce the company’s dependence on the national grid, which will make it more cost efficient and will lead to margin accretion, in our view.

As per its third quarterly report, the State Bank of Pakistan (SBP) has increased the required Capital Adequacy Ratio (CAR) for banks to 10.65 percent, which will be implemented from the last day of the current calendar year. The current CAR requirement of 10.25 percent includes a capital conservation buffer (CCB) of 0.25 percent. The above increase is in line with an already announced timeline.

In a PSX notification, Wyeth Pakistan (WYETH) announced that the board has decided that WYETH should sell the manufacturing facility along with transfer of certain non-core products of the company. In this regard, the board further authorised the company to finalise the consideration and other terms of the Asset Sale Transaction, including the definitive transaction agreements with ICI Pakistan Limited, who has shown interest in the aforementioned transaction. ICI Pakistan (ICI) has issued a notice on PSX on the matter as well.

According to data released by SBP, foreign exchange reserves held by SBP decreased 1.19 percent WoW to $23.3 billion on December 2. Experts said that bulls dominated the index during the outgoing week as the index rallied by 4.9 percent to close at 45,387 points. Investor interest remained concentrated in large cap stocks where average daily turnover (ADT) declined 15.3 percent WoW to 177 million shares compared to an increase of 22.7 percent WoW in average daily traded value (ADTV) to $393 million.

Despite the robust index performance, the foreign investors continued to remain net sellers during the week with FIPI witnessing a net outflow of $24.9 million; however the quantum of outflow was lower as compared to last week where FIPI outflow clocked in at $33.6 million.

The foreign selling was concentrated in All Other Sectors ($12.7 million), E&P ($6.2 million) and Cement ($4.6 million). On the domestic front, the foreign selling spree was absorbed by Mutual Funds ($38.0 million) and NBFC ($8.75 million).

The buoyant index performance during the outgoing week was driven by the index heavy sectors such as Cements (robust volumetric growth) and E&P (production cuts by OPEC), both returning 11 percent WoW and 5.1 percent WoW.

Experts said that the interest in banks will remain strong amid anticipation of a likely increase in DR. Continuation of local participation remains critical to market performance which has so far been an impressive counter balance to aggressive foreign selling.