KARACHI: The spectacular rally that began in the last week of 2017, extended into the New Year marking a perfect beginning to 2018. Over the 12 consecutive sessions of the bull run, the KSE-100 index has accumulated 4,604.57 points (12 per cent).

Throughout the prior week, the bulls held sway as the index stormed through two barriers of 41,000 and 42,000 points, finishing at 42,524 with a gain of 2,053 points (5.07pc), the 7th highest weekly increase in terms of percentage, according to Arif Habib Ltd it represented.

The investors’ interest in equities was fuelled by a relative calm on the domestic political front; Chinese, Russian and Turkish support statements against Trump’s aggressive tweet, attractive valuations of stocks, flush of liquidity, stability of the rupee, rising oil prices and expectations of interest rate hike were all contributing factors. The ‘January effect’ also saw a fresh portfolio build-up by foreign and local investors. Investors remained undeterred by the negative news of the military aid suspension by US government.

During the week, foreigners racked up stocks worth $23 million, representing a sizeable increase from $9m during the earlier week. Major foreign accumulation was in cements ($7.4m), commercial banks ($6.1m) and exploration and production ($1.8m). Among the local investors, mutual funds were net buyers of $8.8m worth of stocks while individuals and insurance companies were net sellers of $13.2m and $11.7m respectively.

Average daily volume for the outgoing week clocked in at 213mn shares, down 0.8pc over the preceding week, while the traded value declined by 2.6pc to $76.7m.

Biggest gainers were Habib Bank, up 2pc, United Bank 3pc, Lucky Cement 3pc, Fauji Fertiliser 4pc and Dawood Hercules 4pc. On the other hand, Pakistan Petroleum, Pakistan Oilfields, Millat Tractor and K-Electric lost 1pc each while TRG Pakistan was down 2pc.

Sector wise top performers were commercial banks, adding 787 points, cement 309, oil and gas exploration companies 253, fertilisers 231, and power generation and distribution 93 points. On the flip side, tobacco and chemicals cumulatively scrapped 29 points from the index.

Major news items during the week included CPI inflation up by 4.57pc in December 2017, increase in cotton production by 7pc, cement despatches boosting by 12pc to 22.2m tonnes in July-December 2017, export of 40,000 of urea to Sri Lanka by local manufacturers, discovery of hydrocarbon at Baratai block by Oil and Gas Development Company and an 11pc year-on-year rise in petroleum sales in December 2017.

OUTLOOK: Market pundits were reluctant to hazard a guess on the performance in the upcoming week. Some expected the momentum to continue where, following the buying by mutual funds in the outgoing week, banks could start building fresh portfolio on their books. The start of the corporate result season could also drive investors’ sentiments. However, detractors thought that a 12-session run-up would have tired the bulls and the upcoming week may see index hover around the current levels. Any adverse developments on the political front could also push investors to book profit at current levels. Finally, the foreign interest in local equities could also be a determining factor in setting the direction of the market.

Published in Dawn, January 7th, 2018