Bulls dominated the stock market for the second successive week as the KSE-100 index finished the first week of 2020 with a gain of 1,475 points or 3.61% to end at 42,323 points.

The euphoric sentiment in the outgoing week propelled the index to trade at a 16-month high amid improvement on the political and economic front. However, regional tensions spiked towards the end of the week roiled stock markets round the world, the impact of which was also felt by the Pakistan Stock Exchange.

The week began with the KSE-100 index inching slightly upward as investors remained concerned on the NAB (Amendment) Ordinance 2019 despite the government providing businesses with assurances of support. Unfortunately, the declarations failed to prevent a downturn as the last session of 2019 saw the index dip due to absence of positive triggers to set a direction.

In a dramatic turnaround, the following two sessions witnessed a phenomenal rally as the investors welcomed the new year in high spirits. The upbeat mood pushed the index higher as it recorded a gain of 1,746 points in the two-day rally as fresh allocations were made and a general aura of positivity prevailed at the bourse. The KSE-100 index closed 2019 as one of the best-performing indices in the region with a 10% return. This news particularly bolstered investor confidence and acted as a catalyst for the surge at the beginning of 2020.

On the other hand, the Central Directorate of National Savings (CDNS) slashed the rates of return on its saving schemes, which provided the market with a much-needed positive trigger and sparked bullish trading. A decline in the rate of return signals an improvement in the economy, hence, the development was welcomed by market participants.

The inflation reading for December 2019 was largely in line with market expectations; hence, the overall mood remained undeterred.

The bourse entered the negative territory once again in the last trading session due to a sudden jump in regional tensions. A US drone strike targeted and killed Iranian Military Commander Qassem Soleimani. The escalation in regional tensions triggered a global selloff, which was also mirrored in the Pakistani stock market.

Moving forward, the research houses expect the market to trade in the positive zone next week, however, they forecast oil scrips to attract the limelight following renewed tension in the Middle East, which are likely to fuel international oil prices.

Optimised reflected in all aspects of the market as average traded volume increased 23% to 281 million, while average value traded rose 29% to $10.7 billion.

In terms of sectors, positive contributions was led by commercial banks (261 points), fertiliser (218 points), oil and gas exploration companies (208 points), power generation (184 points) and cement (171 points).

Scrip-wise, positive contributions were led by Hubco (138 points), Lucky Cement (124 points), Engro (102 points), Oil and Gas Development Company (85 points) and PSO (79 points). On the other hand, negative contribution came from tobacco (27 points).

Foreign selling continued this week clocking-in $7.3 million compared to a net sell of $2.9 million last week. Selling was witnessed in commercial banks ($4.7 million) and fertiliser ($1.4 million). On the domestic front, major buying was reported by mutual funds ($8.6 million) and banks/development finance institutions ($4.2 million).

Among major news of the week was; Abu Dhabi announced $200 million aid for small and medium enterprises, K-Electric tariff was raised, but hike would be absorbed by government subsidies and Pakistan's debt fell to 84.7% of GDP.

© Pakistan Press International, source Asianet-Pakistan