LAHORE -  Bullish sentiments prevailed during the week at the local bourse, with the KSE-100 index closing 2.9 percent WoW (week on week) higher at 44,179 points.

Political news remained at the forefront, however protest rally held during the week failed to create any major impact, which calmed investors' nerves, resulting in positive sentiments at the bourse in subsequent sessions. Volumes and total value traded remained modest, ending down 33 percent WoW (184m shares/day) and 28 percent WoW ($80mn/day), respectively. Foreigners were key net buyers during the week with net buying of $31.5m (with Friday witnessing net buying for 17th consecutive day), whereas local Mutual Funds were net sellers of $12.1m. On a sector-wise basis, Cements (+6.1 percent WoW), textiles (+1.2 percent WoW) and fertilizers (+3.1 percent WoW) were key outperformers.

Experts said that aggressive foreign institutional buying helped market climb by 2.9 percent /1,244pts this week. Foreign buying (FIPI) is gaining traction post Pak rupee devaluation. FIPI MTD cumulative buying has clocked in at $82.5m surpassing the foreign flows last seen back in April 2014.

Investor confidence got boosted this week due to lowering political tensions and statement by Prime Minister Shahid Khaqan Abbasi that premature dissolution of any provincial assembly would not affect the Senate election. Expectation of rate hike and WTI trading around $64/bbl further boosted investor sentiments.

Participation declined significantly, average volumes decreased 30 percent WoW while value declined 28 percent. Stocks including HBL (+6 percent), ENGRO (+7 percent), LUCK (+7 percent), HUBC (+5 percent) & DGKC (+9 percent) added 531pts to the index, while NRL (-8 percent ), ATRL (-5 percent), JDWS (-8 percent), PAKT (-6 percent) & PKGS (-6 percent) withheld 47 points. On the sector front, banks, cement and fertilizer sector cumulatively added 750pts whereas refinery sector took away 27points.

Foreigners bought $33m worth of shares during the week vs buying of $26m during the last week. On the local front, Mutual Funds were net sellers of $12.8m whereas individuals were net sellers of $10.1m.

During the week, Current Account Deficit (CAD) during Dec 2017 stood at $1.1b vs $1.4b last month, in line with estimates. 1HFY18 CAD stood at $7.4b.

According to PBS, 5MFY18 LSM is up 7.2 percent YoY, led by automobiles (+10 percent ), steel (+26 percent ) and minerals (+4.5 percent ). However, LSM, for the month of November, 2017 has fallen by 2 percent YoY. This can be attributed to 22 percent lower food, beverage and tobacco production; within this sugar production has gone done by 80 percent owing to delay in crushing.

According to SBP quarterly review, growth momentum remained strong in the 1QFY18. The production of all major crops increased, while LSM clocked in a nine-year high growth rate with increasing consumer demand, several manufacturers announced new investments. At the same time, infrastructure projects upped their momentum. As the exports receipts recorded a broad-based recovery after three years of decline, FDI inflows posted a nine-year high level. The robust demand also allowed the FBR to achieve the highest tax collection during the last five years.

As per SBP’s current projections, rising oil price while exerting an upward pressure on imports would further widen the services deficit through increased transportation cost. Nonetheless, significant base effect and recent imposition of RD and depreciation of PKR against US$ would likely restrict the import growth during the remainder of FY18. Therefore, the current account deficit projection range remains unchanged. Furthermore, inflows related to recently launched Sukuk and Eurobond, sharp increases in FDI, and expected CSF inflows would help keep the external sector stable to some extent in FY18.

Hino Motors (HINO) reported its 3QFY18 earnings of Rs15.4/sh, down 57 percent YoY. Although sales were up by 22 percent, profitability was hampered by finance charges of Rs241m (likely due to exchange losses) compared to finance income of Rs441mn in the correspondingly period last year.