Weekly review: KSE-100 index gains 2,537 points on market fund euphoria

As uncertainty of the past few days evaporated, investors resumed buying with renewed vigour.

KARACHI (Dunya News) – The Pakistan stock market continued to advance at a rapid pace in the outgoing week as the KSE-100 index surged for the five successive sessions, rising past the 35,500-point mark.

The outgoing week witnessed a spectacular rally as the bulls tossed the KSE-100 index up by 2,537 points (7.6 percent) amid increasing developments on the economic and political front. The index stormed past the 35,500 level to close at 35,703 points.

On Thursday, the KSE-100 index rose 944.20 points (2.73pc) and closed at 35,581.34, taking the previous two sessions’ collective gains at 6.3pc, which marked the highest two-day gains in a decade.

Investors rushed for anticipatory buying before the launch of proposed government guaranteed market support fund.

Companies among investors were major buyers of stocks worth Rs400 billion, which took the total value of shares up to Rs7,200 billion.

Overall, the market seemed to have taken a positive turn, amid volatile trading, in anticipation of creation of the support fund, which was likely to get the go-ahead next week.

The development triggered positive response from market participants, who were also encouraged by the rupee’s stability against the US dollar.

As uncertainty of the past few days evaporated, investors resumed buying with renewed vigour. The index shot up as soon as trading began following announcement that the delayed $3.2-billion Saudi oil and gas deferred payment facility would be operational from July this year.

Rupee recovers in inter-bank

Pakistani currency has recovered over one rupee in the outgoing week after reaching the peak at Rs151.95, and closing at Rs150.91 against the US dollar in the inter-bank market.

In open market, the rupee devalued 50 paisa as compared to the previous week, and currently it is being traded at Rs151.50. It also reached Rs154 before falling back to Rs151.50. Earlier, the central bank let the rupee depreciate 7.5% to an all-time low of 151.95 against the greenback under a fresh round of depreciation from May 16 to 20.

Pakistan remains a net oil importing country and oil remains its largest import commodity.

Drop in gold price

In line with the recovery of the rupee, the price of gold dropped Rs900 per tola (11.66 grams) to Rs70,400, according to the All Sindh Saraf and Jewellers Association sources. In the outgoing week, the price of gold touched all-time high of Rs72,100 per tola.

The drop in the international gold price also contributed to the decrease of $5, at $1,277 per ounce (31.10 grams).

Pakistan remains a relatively small market for gold but it largely depends on imports as it does not produce the precious metal locally.