During the week ended 15th November 2019, the benchmark index of Pakistan (PSX gained 1,606 points or 4.5%WoW. The robust week can be attributed to a successful IMF staff level review paving way for the disbursement of US$450 million early next month and easing off political noise after termination of Dharna. Share prices of ASTL and MUGHAL increased on the back of expected pick-up in construction activity. HCAR also posted above expectation result, which led to stock closing at its upper circuit in the last two sessions of the week.
Based on NCCPL data, foreigners bought equities worth US$4.2 million. While locals also emerged net buyers with US$16.8 million, banks remained net seller with US$18.8 million. Average daily turnover significantly improved 28%WoW to 311 million shares. Top performers during the week included HASCOL, ASTL, CHCC, PIOC and GWLC, while FFC and EFERT were the laggards. BOP, PAEL, UNITY, TRG and FCCL remained major volume leaders.
Other major factors contributing to rally during the week included: 1) pick up in foreign investment in treasury bills (US$267 million during the first two weeks of the current month, 2) SBP’s decision to increase loans for the exporters by Rs100 billion, 3) allocation of additional Rs250 billion to resolve the problem of circular debts, 4) tax incentives for the companies involved in construction of houses, 5) allowing manufacturing sector an advance payment of up to US$10,000 for import of raw materials and spare parts to spur LSM sector and 6) trade deficit shrinking by 29% in October 2019 and 34%YoY during 4MFY20.
In the upcoming week, sentiment will be shaped by the monetary policy statement (date not announced yet). Analysts expect status quo to prevail over, as weak reserve buffer stands as the major impediment in rate cuts in near term. Relative calm on the political front amidst positive macros, the market is likely to continue its positive momentum.