Stocks to take cue from oil prices; investors on lookout for Fed rate

Stocks market continues to move up after gaining almost five percent this week with investors taking cue from commodity price movements, while US Fed decision will remain a major event in the upcoming week, dealers said. 

Analysts said the market still awaits the announcement of export package, which will be a big positive for the export-oriented sectors. Postponement of Panama case provides a breather to the market. Positive sentiment is expected to continue during the next week, they said.

The KSE 100-share Index of the Pakistan Stock Exchange gained 4.89 percent or 2116.33 points to end the week at 45,387.23 points on massive liquidity influx. KSE 30-share Index rose 5.52 percent or 1,280.58 points to close at 24,447.43 points.  Average trading volume significantly expanded 20 percent to 493 million shares week-on-week. Foreigners remained net sellers of equities worth $25 million, taking the year to date net sale to $229 million.

Analyst Faizan Ahmed at JS Global said the index posted strong gains in the last session after the Supreme Court adjourned hearings on corruption scandal till January 2017. “Strong performance was mainly led by heavy buying from the local asset management companies (AMCs), which looked to allocate influx of huge liquidity to their respective portfolios,” Ahmed said. “A massive $40 million of net buying by local AMCs was recorded during the week as compared to $19 million witnessed in the previous week.” Local Individuals also jumped on the bandwagon and followed with a net buying of two million dollar during the week.

Analyst Ali Raza at Elixir Securities said cement stocks rallied 11.6 percent in the outgoing week on account of robust growth in cement dispatches and decline in international coal prices.  “Lucky Cement contributed 307 points. It came into the limelight primarily on the back of major announcements of investment in multiple business ventures, including automobile venture,” Raza said. BIPL Securities, in a report, said the index closed five consecutive sessions on the all-time high levels mainly supported by oil in the later half of the week. “Panama case hearing was the only event making the investors fearful,” it said. “However, it turned out to be a non-event after the hearing was postponed, fueling the already high enthusiasm of investors.” 

A possibility of gas price cut – already approved by Economic Coordination Committee – along with expectations of healthy fertiliser off-take in November led to some positive activity in the sector.  Oil and gas sector also performed positively with a growing confidence among investors for a successful implementation of the Organisation of the Petroleum Exporting Countries deal, leading to a surge in oil prices. The Federal Board of Revenue collected Rs1.073 trillion in the first five months of 2016/17, up two percent, while missing the target by a wide margin. The central bank increased the capital adequacy ratio for the banks to 10.65 percent from 10.25 percent. The government removed the unofficial ban on cotton imports from India.