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PSX recovers 1.1% WoW as MSCI inclusion nears

KARACHI: The market remained under pressure for the majority of the week, with the KSE-100 index finally recovering towards the close of the week to finish at 49,851 points level, up 1.1 percent Week on Week (WoW).

An analyst at Elixir Research said the benchmark index continued its upward stride during the outgoing week, adding a further 550 points (+1.1%) to the index.

Rally was primarily fueled by the Financials (3.7%) which alone added 532 points to the KSE-100 index where significantly higher than expected inflation readings for April’2017 re-ignited hopes of an early interest rate lift-off. “We expect market to test new highs in the lead up to formal inclusion in MSCI index while budget related news flow will guide sector heavy scrips”, said the analyst.

According to Ahmed Lakhani of JS Research, a reason for the positivity towards the end of the week was increased locals’ participation in anticipation of foreign inflows as the MSCI inclusion date comes closer.

During the week, Foreign Investors Portfolio Investment (FIPI) registered net selling of $19 million. However, average daily volumes fell 26 percent WoW, with noise on the political front continuing to weigh down investor sentiment. Similarly, average daily traded value also clocked in 20 percent WoW lower.

Among major sectors, banks were major gainers, up 4 percent WoW, due to a combination of better-than-expectation first quarter results, where Faysal Bank remained a star performer, and upcoming inclusion in MSCI.

Conversely, Exploration and Production E&Ps finished in the red zone, down 2 percent WoW, in line with decline in crude oil prices (WTI down 8 percent WoW).

MSCI painted stocks led the surge with Habib Bank Limited (HBL) (+7.4%)/ United Bank Limited (UBL) (+5.0%)/MCB (+5.6%) contributing a cumulative 439 points to the index while Lucky Cement (+6.3%) and Engro (+5.11%) also came back in limelight.

Trading activity declined considerably during the week with average daily volume of 264 million shares down 26 percent WoW owing to high base of previous week which entailed futures rollover week.

Amongst the locals, mutual funds sold equities worth $20.9 milion during the week along with $ 5.3 million selling by other organizations.

Individuals bought equities worth $27.8 million followed by banks, ($ 8 million), insurance companies ($ 4 million), companies ($3.2 million), NBFCs ($ 2 million) and brokers’ prop trading ($0.5 million).

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