The stock market extended last week’s gains to close the week 3% WoW higher at 32,351 with trading volumes averaging at 240m shares per day (-5% WoW). Foreigners turned net sellers during the outgoing week, with net foreign selling of $6mn vis-a-vis net buying of US$4mn the preceding week. Heavy-weight Oil and Gas sector rallied led by discovery of hydrocarbon reserves in Mardankhel (Tal Block) and uptick in international oil prices, while Cements and Fertilizers stocks gained as the government once again delayed the gas tariff hike. The book-building for the Secondary Public Offering (SPO) of Habib Bank Limited (HBL) was also completed during the week, where Government of Pakistan is initially offering 250mn shares at a floor price of Rs166. Other key highlights of the week were: (1) Chinese President postponing his trip to Pakistan due to a fragile situation in Yemen, (2) Government announcing Power Policy 2015, (3) Government considering introduction of uniform gas tariff, (4) Cement dispatches rising by 4% YoY in 9MFY15 and (5) OMCs sales growing by 17% YoY in March 2015.

Experts said that index increased on the back of buying by local mutual funds, compared to 4.9% increase in the previous week. Amongst key sectors, major buying was seen in Oil & Gas, Food Producer, Cement and Telecom sectors, which were up 4% WoW, respectively. During the week, average daily volumes clocked in at 240.4mn shares, down 5% WoW, while average daily value increased by 15% WoW to Rs13.8bn (US$135.1mn).

This week foreigners sold shares valuing US$74.1mn and bought US$67.6mn with net selling of US$6.5mn. Local mutual funds were net buyers of US$22.6mn while local banks were net sellers of US$8.3mn.

Jahangir Siddiqui Company (JSCL), Kohinoor Textile Mills (KTML), Kohat Cement (KOHC), The Resource Group (TRG) and Pakistan Cables (PCAL) were major gainers during the week, while Jubilee General Insurance (JGICL), Avanceon (AVN), Lafarge Pakistan Cement (LPCL), Shifa International Hospitals (SHFA) and Habib Metropolitan Bank (HMB) were the biggest losers.

Habib Bank’s (HBL) 609.3m shares offer has been subscribed according to latest available information available on the KSE website. Govt. is anticipated to fetch over $1b if it accepts bids for 609.3mn shares. This will be the biggest capital market transaction in Pakistan and second biggest privatization deal (after PTCL). HBL was privatized in 2004 and was sold to Agha Khan Fund for Economic Development at Rs22bn for 51% stake (market capitalization Rs44bn). The response to HBL secondary offer was far better than expectations. This deal will also help also help Govt. attract FDI.

During the week, Kohat Cement (KOHC) was the first cement company to announce its 9MFY15 earnings. KOHC posted earnings of Rs2.2bn (EPS Rs14.4), down 8% YoY (up 27% QoQ due to lower energy cost). 50% hike in electricity tariff in Apr 2014 resulted in YoY earnings attrition. The company also announced interim cash dividend of Rs5/share. Following suit, other cement players are also expected to announce strong QoQ earnings growth on the back of declining energy costs. Kohinoor Textile Mills Ltd. (KTML), the holding company of Maple Leaf Cement Factory (MLCF), sold 15mn shares of MLCF on Apr 8, 2015, as per a KSE notice. KTML now holds 55% shareholding in MLCF. With this divestment, KTML will have a capital gain of Rs752mn (EPS impact Rs3.1) in its unconsolidated accounts.