Author: Hamza Shahnawaz

KARACHI: The stock market likely to stay positive during next week owing to clarity on the International Monetary Fund (IMF) front.

Analysts at Arif Habib Limited expect that bourse to remain in the green zone amid clarity on the IMF front.

Moreover, they expect foreign inflows in the upcoming month amid ‘January effect’.

READ MORE: IMF Board to approve $1.059bn by Jan 12, 2022: Tarin

Overall optimism with respect to upcoming corporate result season and scrips currently being traded at attractive valuations is further expected to boost positive sentiment in the bourse.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.0x (2022) compared to Asia Pac regional average of 15.0x while offering a dividend yield of around 8.9 per cent versus around 2.2 per cent offered by the region.

READ MORE: KSE-100 index gains 180 points amid profit-taking

In the week commencing December 27, 2021, KSE 100 index shredded 204.95 points owing to lack of clarity on implications of supplementary Finance Bill & mini budget and looming concerns of Omicron variant across major cities of Pakistan.

However, the market adopted a positive momentum for the remaining week once uncertainties related to supplementary Finance Bill & mini budget gradually began to dispel after it was tabled in Cabinet.

The week neared its end with investor sentiments further strengthening after the supplementary Finance Bill and mini budget received Cabinet’s approval, as it was the last hurdle remaining in the way of USD 1 billion tranche disbursement from IMF (meeting due on January 12, 2022).

Furthermore, the PKR/USD Parity strengthened to PKR 176.51 (4-weeks high). The market snapped its 4-day bullish streak and closed at 44,596.07  points, gaining 179.87 points (up by 1.1 per cent) WoW. The activity in the outgoing week remained subdued with total volume averaging at 218 million.

READ MORE: Dollar retreats to year end at Rs176.51

Sector-wise positive contributions came from i) Cement (112 points), ii) Fertilizer (75 points), iii) Commercial Banks (72 points), iv) Tobacco (32 points), and v) Oil & Gas Marketing (32 points). Whereas, sectors which contributed negatively were i) Power Generation (18 points), ii) Inv. Banks (7 points). Scrip-wise positive contributors were MCB (45 points), POL (34 points), ENGRO (33 points), DGKC (33 points) and PAKT (32 points). Meanwhile, scrip-wise negative contribution came from HUBC (39 points), HMB (18 points) and ABOT (17 points).

Foreign buying witnessed this week, clocking-in at USD 8.1 million compared to a net sell of USD 3.7 million last week. Major buying was witnessed in Technology (USD 4.8 million) and All Other Sectors (USD 2.5 million). On the local front, selling was reported by Banks/DFIS (USD 2.5 million) followed by Individuals (USD 2.0 million). Average volumes clocked-in at 218 million shares (up by 1.2 per cent WoW) while average value traded settled at USD 84 million (up by 13 per cent WoW).