LAHORE -  The outgoing week witnessed bulls clamouring to buy equities ahead of the MSCI announcement expected on May 15, 2017. Unsurprisingly, activity remained concentrated in heavyweight stocks which are expected to be included in the main and small cap MSCI index.

As a result, heavyweight sectors such as Oil & Gas (+6.5 percent WoW) and Commercial Banks (+5.0 percent WoW) posted strong gains whereas other sectors such as Autos (+1.4 percent WoW), Fertilisers (+0.8 percent WoW) and Pharmaceuticals (-0.2 percent WoW) were laggards during the week. Overall re-positioning helped index close at historic high level of 51,751pts (+3.8 percent WoW). Quite surprisingly however, foreign investors stayed on the sidelines with net selling of $2.5 million worth of equities. Local institutional investors such as banks and local companies also booked profits with $3.1m and $8.2m worth of selling during the week, while individuals bought assets ahead MSCI rebalancing with $7.4m worth of purchases.

Experts said that the week marked a milestone for the local bourse as the benchmark KSE-100 index recorded a new all time high level closing at 51,750 today, up 3.8 percent. Investor participation improved in the run up to the impending MSCI reclassification as ADT/ADTV rose 34.6 percent/32.7 percent.

During the week, Pakistan Bureau of Statistics (PBS) released trade deficit data, revealing further widening of trade deficit for the month of April by 51 percent YoY, taking deficit for 10MFY17 to $26.6b (increasing 40.1 percent). This was due to the surge in imports by 19.9 percent in the period while exports witnessed a 2.3 percent decline. As per central bank, worker remittances eased off in the outgoing month by 9.2 percent MoM to $1.5b. This took remittances for 10MFY17 to $15.6b, depicting a decline of 2.8 percent YoY. Moreover, recently released auto sales numbers indicated that although volumes fell 7 percent MoM in April 2017, they improved 15 percent in 10MFY17 (after adjusting for Apna Rozgar units), showing buoyant demand in the auto space.

Experts believe sentiments will remain upbeat at the local bourse leading up to Pakistan's MSCI reclassification into emerging markets. Better volumes as of late, coupled with improved investor interest, particularly in large cap stocks, are likely to maintain going forward. “With Budget FY18 just around the corner, likely populist measures by the government before elections will spark interest in select sectors where we highlight Fertiliser (possible subsidy), Autos (particularly tractors as pro-agri measure), and Construction & Material and Steel (with greater development outlay in the coming fiscal year) among likely beneficiaries,” the experts said.

Experts said that market continued to follow positive trajectory for the second consecutive week ahead of Pakistan’s entry into MSCI EM index. Stocks including HBL, MCB, LUCK, OGDC and PPL drove the index contributing 856 points. On the other hand, stocks including PIBTL, FFC, EFERT, ACPL and HASCOL withheld 51 points from the index.

On the sector front; Oil & Gas Exploration sector outperformed the market growing by 7 percent driven by higher oil prices; followed by Commercial Banks that were up 5 percent. On the contrary, Transport sector was down 2 percent as pressure was seen in PIA and PIBTL stocks.

During the week, Hino Pak announced financial results for the year ended March 2017 today. The company’s bottom line remained flat as reported net profits stood at Rs1.1b (EPS 90.31), up 1 percent YoY. Net revenues witnessed a surge of 24 percent while gross profits declined 11 percent YoY. As a result, reported gross margins stood at 11 percent, shrinking 4ppt during the year. To point out, in volumetric terms HINO managed to register a growth of 26 percent YoY with volumes reaching to 3,719 units (including busses) during the year. Crescent Steel and Allied Products (CSAP) notified the PSX today that Sui Nothern Gas Pipeline (SNGP) has awarded Rs4.2b worth of a contract to the company for the supply of 36 inch Bare Pipes. The contract is expected to be executed by 2QFY18.

As per the notice, Byco Petroleum (BYCO) stated that at a recent meeting, the company’s BOD has resolved that following the merger of Byco Oil Pakistan Limited (BOPL) into BYCO, a total of 5 billion new shares will be issued to the shareholders of BOPL, consistent with the prescribed ratio of 1.67 shares of BYCO for each share of BOPL as approved under the scheme.