Weekly Review: equity market to rebound on improved economic indicators

KARACHI: The equity market is expected to rebound next week after tracking negative leads in the past three weeks, analysts said.

Analysts at Arif Habib Limited said that the benchmark index to witness a rebound given improvement in economy as current account deficit has narrowed by 17 percent to USD 8.4 billion coupled with tension between Pakistan and India cooling off and materialization of Saudi deal which will improve the investment climate.

On the other hand, rising international oil prices and expected result announcement of INDU, DGKC, NML, ASTL, PPL, SEARL and BOP may keep these scrips under limelight.

This week trading commenced on a negative note despite historic visit of the Saudi Crown Prince where both the governments signed an investment deal worth $ 21 billion.

The analysts believed market activity remained sluggish and the index hovered sideways on the back of i) tension between Pakistan and neighboring country India post Pulwama terrorist attack which led to the imposition of 200 percent regulatory duty on Pakistani exports; this triggered a selling pressure in cement scrips, ii) Lower than expected results of heavy weight scrips (UBL, HBL, HUBC and KAPCO), and iii) ongoing meeting of the Financial Action Task Force (FATF) to review Pakistan’s status.

As a result, the benchmark KSE-100 index closed at 40,016 points, down by 471 points or 1.16 percent WoW.

Contribution to the downside was led by i) Power Generation and Distribution (-142 points) due to absence of dividend in their recent result announcement, ii) Commercial Banks (-139 points) amid lower than expected results, iii) Pharmaceuticals (-35 points), iv) Transport (-27 points), and v) Tobacco (-26 points).

Scrip wise major losers were UBL (-120 points), HBL (-115 points), HUBC (-68 points), KAPCO (-56 points) and SNGP (-37 points). While, the only sector that contributed positively to the index was Oil and Gas Exploration Companies (+85 points) due to surge in international oil prices.

Foreign buying continued this week clocking-in at USD 3.5 million compared to a net buy of USD 12.1 million last week. Major buying was witnessed in Cements (USD 3.3 million) and Commercial Banks (USD 1.4 million).

On the local front, selling was reported by Individuals (USD 4.7 million) followed by Companies (USD 1.0 million).

That said, average daily volumes for the outgoing week were down by 22 percent to 105 million shares likewise value traded decline by 14 percent to USD 39 million.

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