LAHORE - Market witnessed some recovery during the outgoing week with KSE-100 index inching up by 0.9 percent WoW to close at 41,436 points. Most of the pullback can be attributed to buying by mutual funds post relaxation of cash holding rules and value buying at cheap multiples.

Mutual Funds during the week bought $17.2 million worth of equities, whereas banks (net selling of $6.6m) and individuals (net selling of $3.2m) continued to offload their positions. Despite bounce back in the market, overall activity remained lackluster with average traded volume and value clocking in at 114 million shares per day (-3 percent WoW) and $60 million per day (-12 percent WoW), respectively. Cherry-picking in mid-low market cap sectors mostly prevailed with stocks such as SSGC (+7.07 percent WoW), SHFA (+10.65 percent WoW), HCAR (+9.68 percent WoW), DAWH (+9.69 percent WoW) and HASCOL (+5.51 percent WoW) etc garnering investor attention. Heavyweights such as Banks (+0.40 percent WoW), Cements (+0.70 percent WoW), OMCs (+1.77 percent WoW) and Fertilisers (+0.49 percent WoW) gained value.

Experts said that index rebounded 1 percent/370 points during the outgoing week. Gains were led by index-heavy E&P sector (+2 percent WoW) on the back of by higher international oil prices driven by the corruption purge in Saudi Arabia. Investors also cheered SECP’s notification pertaining to relaxation of minimum 5 percent cash restriction for Asset Management Companies.

Stocks including DAWH (10 percent WoW), PPL (2 percent), SEARL (8 percent), MTL (6 percent) and HCAR (10 percent), added 225 points to the index. On the other hand, PAKT (-12 percent), KTML (-10 percent), UBL (-3 percent), MCB (-1 percent) and FATIMA (-3 percent) detracted 115 points from the index. On the sector front; Pharmas and Auto Assemblers gained 3 percent a piece, E&Ps and OMCs gained 2 percent each, Cements gained 1 percent, Banks inched up 0.4 percent, while Textiles shed 1 percent, Insurance was down by 2 percent & Tobacco tanked 10 percent.

Mutual Funds ($17m) were the largest domestic buyers, while foreigners were net sellers of $1.8 million during the week vs selling of $30.7 million last week. Selling was concentrated in Banks ($5m) & Fertiliser ($3m) whereas buying was seen in Oil & Gas Marketing ($3.3m) and E&Ps ($1.7m).

Pakistan’s foreign exchange reserves stood at $19.9 million for week ending November 3, 2017, flat compared to previous week. SBP’s reserves were $13.9 billion whereas reserves held by commercial banks stood at $6.1 billion. State Bank of Pakistan (SBP) Deputy Governor Jameel Ahmad while speaking at Bloomberg Pakistan Economic Forum 2017 said that recent taxes imposed by the government are expected to curb unnecessary imports. “Things on the external front are improving” he said. Macro-economic picture is positive, outlook is encouraging. Sukuk, Eurobond issuance will help bring stability on external front.

World Bank raised alarms for Pakistan’s economy and predicted that inflation would increase to six percent next year as it linked Pakistan’s bullish economic prospects with continuation of reforms to address the current and fiscal account deficits. “Despite an increase in macroeconomic imbalances during FY17, growth is projected to increase moderately and touch 5.8 percent by FY19,” the bank said. “This outlook is contingent on maintaining macroeconomic stability as well as steady progress in implementing the main pillars of the government’s medium-term reform program which targets key constraints to growth.”

Kot Addu Power Company (Kapco) received a notification from its major shareholder, Water and Power Development Authority (Wapda) requesting Kapco to suspend proceeding with the proposed transaction where Kapco is planning to buy 201 million shares of Hub Power Company (HUBC), offered by Dawood Hercules (DAWH) amongst others. As per the notice, Kapco would require a special resolution to proceed with the transaction under the provision of the Share Purchase Agreement (SPA).