December 15, 2019 (MLN): The KSE-100 Index gained nearly 184 points during the week ended December 13, and settled at 40,916 points, i.e. up by 0.45% as compared to previous week’s closing of 40,732 points.

E&P Companies emerged as the best performing sector during the week, as it contributed 273 points to the index, followed by Chemical Sector (54 pts), and Food and Personal Care (47 pts).

Company wise, the scrips of OGDC (101 pts), PPL (84 pts), MARI (52 pts), and NESTLE (43) earned the maximum gains.

Meanwhile, the KSE All Share Market Cap increased by Rs. 105.5 billion or 1.35% over the week, being recorded at Rs. 7.9 trillion as compared to a Market Cap of Rs. 7.79 trillion recorded last month.

This week, the local investors bought securities worth Rs. 68.9 billion, amongst which, Individual investors emerged as the largest net buyers as they bought securities worth Rs. 42.9 billion. On the other hand, local investors sold securities worth Rs. 67.5 billion. This resulted in an overall net selling of Rs. 1.4 billion over the week.

Forex Update

PKR continued to strengthen against the dollar gaining another 11 paisa during the week to close at 154.96, the first time since June 13, 2019 that the dollar has been below 155.

While PKR extended it run of successive gains to the eleventh straight week, it has only gained Rs1.57 or 1% against the dollar during the period.

The offer rate for the Dollar was quoted below the interbank rate in the open market, although not by a significant amount, however it points to greater supply than demand.

Even as economic numbers continue to show a more positive trend with improving remittance and trade numbers being reported along with inflows of investment and foreign loans the tepid appreciation in the value of the local currency shows the economic managers sticking to IMFs recommendation of a weak currency to boost exports and trim the trade deficit, especially since the Real Effective Exchange rate has increased by 4.10 percent in 4 months of FY20.

The Forex Reserves numbers reported by the SBP showed that its reserves increased even though it made a repayment of USD 1 Billion on account of the maturing Eurobond, the increase did not include the 1.3 billion USD received from the ADB.

However, with the pressure on the local currency easing, the SBP allowed banks to make advance payment up to 50 per cent of the value of imports against letter of credit for manufacturing concerns. Using this facility, manufacturing concerns will be able to import plant, machinery, spare parts and raw material etc. by making payment in advance.

Earlier in July 2018, in light of the pressures in the foreign exchange market and deteriorating balance of payments situation, SBP withdrew the advance payment facility allowed to importers.

Fixed Income

Decline in PIB & T-Bill yields resumed after a two week break following a reduction in cut off yields in the PIB auction held last week.

While the decline in short term yields of 3 and 12 months was marginal, just 2 and 7 basis points the yield for the 6 month T-Bill went up by 4 bps.

Yields for longer term PIB’s of 3, 5 and 10 years declined by 11, 22 and 26 basis points with the 10 year yield falling below 11 percent.

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