KARACHI: The stock market turned the corner in the outgoing week, gaining 1,113 points, or 2.54 per cent, to close at 44,901 points. It represented sharp recovery from the free fall to 43,788 points, the lowest weekly close year-to-date.

During the outgoing week, the index witnessed high and low of 45,613 and 43,788 points reflecting severe volatility.

The investors returned to the market as their confidence was reinvigorated by a thaw in the political atmosphere after the government and its allies won the seat of Senate chairman and deputy chairman in secret ballot and the apparent crack in the ranks of the opposition parties leading to the postponement of the March 26 long march.

Other positives that helped elate investor sentiments including the consistent appreciation in the value of the rupee to a one-year high and increase in Large Scale Manufacturing by 7.85pc in 7MFY21. Market chatter suggested that the government’s new refinery policy to provide variety of incentives to the sector was about to be unveiled.

However, the government’s proposal to withdraw 80 income tax exemptions to the tune of Rs140 billion on IMF’s conditions was app­roved by the federal cabinet which went to dampen investor sentiments. Further, the major 8pc fall in international oil prices pulled down heavyweight scrips in the Explo­ration & Production sector. Rising cases of Covid-19 also gave a cause for concern.

Going forward, most stock strategists were positive that the market would continue to head northwards and strengthen the recovery made in the outgoing week, from the massive fall in the preceding week.

The optimism was underpinned by the SBP decision to keep policy rate un­­changed at 7pc with projecting the CAD to remain below 1pc of GDP for FY21 and forecasting GDP growth rate at 3pc for FY21. The appreciation in the value of the rupee provided a boost to investor sentiments.

Published in Dawn, March 21st, 2021