Pakistan's benchmark KSE-100 Index closed the week ended 6 November at 173,887 points, up 7,477 points or 4.5 per cent from 166,409 the previous week, in its strongest weekly rally in nearly six months. The gains came despite a sharp fall on Friday, when profit-taking pulled the index down 1,493.18 points, or 0.85 per cent, to 173,886.68 on turnover of 1.48 billion shares.

The week was volatile. The index touched a high of 176,604 points and a low of 165,585, but buying momentum through most of the week outweighed Friday's late-session selling, which hit heavyweights including UBL, Lucky Cement, Engro Holdings, Fauji Fertilizer and Pakistan Petroleum. Market capitalisation rose 2.8 per cent over the week to Rs18,909 billion, while average daily traded volume surged 43 per cent to 856 million shares.

Cheaper oil and easing inflation

Two forces drove the rally. Brent crude fell sharply during the week to about $98.50 a barrel, down from an average of about $115.50 the previous week, as Iran signalled a willingness to engage in talks. Pakistan imports most of its oil, so cheaper crude eases pressure on the import bill and on inflation. October consumer price inflation also eased to 9.6 per cent year on year, from 10.3 per cent in September.

The State Bank of Pakistan's foreign exchange reserves rose by $39 million to $21.56 billion in the week ended 30 October, and the rupee closed the week marginally stronger at Rs276.66 to the US dollar. The exchange is closed on Monday, 9 November, for the Iqbal Day public holiday, so trading resumes on Tuesday. Investors will next watch the MSCI review due on 11 November, which can change how much foreign money flows into Pakistani shares.