January 12, 2020 (MLN): With a week full of constant ups and downs, the KSE-100 index emerged victorious with an approximate gain of 883 points and concluded at 43,207-mark.
The index opened on a negative note amidst rising tensions between the United States and Iran, following the assassination of an Iranian General by the former. The political turmoil worsened after Iran retaliated by striking US Military bases in Iraq, causing several stock markets across the region to suffer the brunt.
However, the situation quickly took a turn for good after the President of the United States informed of no further plans to escalate the tensions with Iran. As a result of this, the benchmark index ended up gaining several points in the following three sessions.
Commercial Banks and E&P Companies emerged as the top gainers during the week, as they added 581 points to the index.
Moreover, the All-share market cap increased by USD 581.1 million i.e. 1.12% during the week.
Foreign investors were net buyers by USD 7.01 million during the week, as per the data maintained by NCCPL, with foreign corporations doing the bulk of the buying.
Within local investors, Mutual Funds and Individuals were the main sellers with USD 5.86 and 4.01 million, while Insurance Companies and Broker Proprietary Trading were net buyers at USD 2.49 million and USD 2.47 million.
After a brief interruption, PKR resumed its trend to gain against the USD for the second consecutive week in the interbank.
The Pak Rupee gained 6.5 paisa during the week and has strengthened by 20 paisa in the last 2 weeks. Year to date, PKR has appreciated by 16 paisa.
However, with the currency more market driven, volatility has increased with the 10 Day volatility jumping to 0.82 percent compared to 0.72 percent from the previous week.
With strong remittances and weak imports, the currency looks likely to remain strong in the short term.
Fixed Income Update:
Yields in the money market for short and long term securities displayed a mixed trend, with yields up to 3 months displaying marginal decline while yields up to 9 years increased, however 10 year PIB and above stayed unchanged.
The highest increase was in the 2 and 5 year bonds with yields increasing by 23 and 18 basis points.
PIB auction conducted last week witnessed 3 and 5 year yields remaining static while 10 year yields came down by 9 basis points.
Data released by the state bank of Pakistan showed increased trading in the 10 year Floating Rate PIB.
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