KARACHI: Stocks rebounded after two weeks of decline, with the benchmark KSE 100-share index rising by 616 points, or 1.3 per cent, to close the outgoing week at 49,624.

On Thursday, the index posted its highest single-day gain in four months of 704 points, which turned the tables on bears.

Trading on the Pakistan Stock Exchange (PSX) started with dampened sentiments, mainly because of uncertainties surrounding a court ruling on the Panama Papers case.

Sell-off was witnessed in the first half of the week amid a crackdown by the regulator on some brokerage houses for allegedly abusing in-house financing, committing fraud and using deceptive business practices.

However, the reported consensus reached between brokers and the regulator over leverage later in the week played out as a key trigger for the market rally.

This was supplemented by the news of additional six stocks Habib Bank (HBL), Mari Petroleum, Searle Pakistan, Engro Fertilisers, Nishat Mills and Fauji Cement to be included in the FTSE Global Equity Index Series.

Foreign investors continued their selling streak with a net outflow of $32.7 million during the week against a net sale of $4.8m in the previous week.

Major foreign buying was seen in oiland gas exploration companies, whereas major selling was seen in the cement sector. Among local participants, corporates and banks absorbed much of the foreign sell-off amounting to $21.03m and $13m, respectively.

Average daily volumes were recorded at 301m shares, down 6.4pc over the previous week, while average traded value fell 1pc to $137m.

Commercial banks contributed 170 points to the index, of which HBL`s contribution was 160 points.

The oil and gas marketing sector contributed 77 points, of which Sui Northern Gas Pipelines Ltd (SNGPL) gained 51 points as investors were enthused by the company`s latest announcement of Rs111 billion planned capital expenditure.

Refineries gained 7pc, with Attock Refinery rallying 9.6pc due to the start of Euro-II diesel supply to oil marketing companies. Stocks of engineering companies rose by 3pc, supported by Crescent Steel which gained 13.7pc.

On the flip side, food companies declined 2pc as heavyweight Nestle Pakistan shed 4.7pc during the week, while some profit-taking was witnessed in cements which fell 1pc.

Leaders during the outgoing week included Lotte Chemical which rose 22.11pc , Engro Polymer 15.41pc, AL-Ghazi Tractors 10.54pc, SNGPL 9.87pc and ICI Pakistan 9.44pc.

Laggards included Nishat Chunian which dropped 6.46pc, HabibMetropolitan Bank 3.41pc, Pioneer Cement 2.43pc, Dawood Hercules 2.3pc and Pakistan Petroleum 2.21pc.

The news flow included: annual inflation hit a three-month high of 4.2pc in February; Bestway Cement announced that it plans clinker plant; and HBL notified the stock exchange regarding the reduction of authorised capital from Rs30bn to Rs29bn by cancellation of 100m ordinary shares.

Moreover, ICI Pakistan said in a notice that its board of directors` has approved the acquisition of manufacturing facilities, products and registrations of Wyeth Pakistan Ltd as well as some of Pfizer`s products.

And SNGPL approved a project to build its second liquefied natural gas pipeline at an estimated cost of Rs111bn, expected to be completed by October 2018.

OUTLOOK: With the results season almost reaching its conclusion and the noise over in-house leverage dying down, the investor focus would shift to the judgment over the Panama Papers hearing. Market pundits expect trading to remain range-bound amid unimpressive volumes.

However, if a new leverage product is introduced and if a substantial amount of proceeds of the divestment of a 40pc stake in the PSX passes on to stockbrokers and finds its way into the stocks, it could boost positive sentiments for the market to retest the previously attained all-time high level of 50,886.80 points.