February 1, 2021 (MLN): The KSE-100 index gained around 2,630 points during the month of January and closed at 46,385-mark i.e. around 6.01% higher as compared to the closing of the previous month.
According to a report by Arif Habib Limited, the Pakistan stock market emerged as the second-best performing market in the region and seventh-best performing market in the world. Not just this, the KSE-100 returns (6.0%) outperformed the last 10-Yr average returns (4.1%) of January.
The benchmark index managed to cover a significant distance as it gradually slithered towards the 50,000-mark. Sentiments throughout the month remained positive on account of several positive factors, such as the decision by the State Bank of Pakistan to maintain the Policy Rate at 7%, which further helped in declining inflationary pressures.
Other economic factors that played a significant hand in driving the performance of the index include the LSMI index, which once again grew by a noteworthy margin of 14.5% YoY for the month of November. Financial results announced by several companies, with most of them reporting a favorable change in earnings, also drew participation from local as well as international investors.
The country once again saw a substantial inflow of remittances which amounted to nearly $2 billion in January, even though the figure is less than $2.4 billion reported in December 2020. While this provided a cushion to reserves of the State Bank, the country was soon taken aback as the trade numbers showed a Current Account Deficit, after showing a Current Account Surplus for consecutive five months.
Textile Industry emerged as one of the best performing sectors during the month, as several investors chose to put their money in the scrips of textile companies after the government issued updates regarding the announcement of Textile Policy for FY2025.
As for the Power & Distribution Sector, the investors gained confidence after a plan for circular debt clearance was announced this month. According to Arif Habib’s report, the said plan involves the first installment (40%) to be paid in February (33% cash, 33% Sukuk, and 33% floater PIBs) while the remaining is expected to be paid in 6 months with the same structure.
Sector-wise, Commercial Banks, Technology & Communication, Power Generations & Distribution, Cement, and Textile Composite emerged as the best performers during the month, as they contributed around 535, 452, 374, 277, and 200 points respectively to the benchmark index. In particular, the scrips of TRG (+381), HUBC (+184), HBL (+166), KAPCO (+153), and PSO (+134) turned out to be the most pleasing ones.
During the month, 75 companies traded in green while 24 landed in the red zone. The All-Share Market Cap increased by nearly USD 2.18 billion, i.e. 4.34% higher than the previous month. In terms of PKR, the All-Share Market Cap surged by Rs. 363.09 billion i.e. 4.52% higher as compared to the last month.
Figures released by NCCPL showed that foreign investors sold a net USD 1.82 million worth of stocks during the month with foreign corporates doing the bulk of selling @ USD 11.35 million. This was majorly offset by purchasing of stocks worth USD 9.64 million by Overseas Pakistanis.
On the local front, Individual investors purchased USD 44.26 million worth of stocks, followed by USD 15.09 million worth of stocks bought by Local Companies. Other significant transactions included USD 27.38 million and USD 13.26 million worth of stocks sold by Insurance Companies and Banks/DFIs respectively.
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