KARACHI: The stock market likely to stay in green during the next week owing to lower interest rate regime. Analysts at Arif Habib Limited said that the market to continue trading in green. The low interest rate regime and pro-growth stance of the State Bank of Pakistan (SBP) should keep equities attractive.
Moreover, as mentioned earlier the result season should keep cyclical in limelight while reduced provisioning, and healthy fee income/capital gains should help fuel banking earnings.
That said, COVID fourth wave is a concern which may keep sentiment jittery.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.7x (2021) compared to Asia Pac regional average of 16.1x while offering a dividend yield of 6.6 per cent versus 2.4 per cent offered by the region.
The domestic bourse closed the week in green this week. The investment climate took a major sigh of relief when the trade deficit posted a 16 per cent month on month decline as per Pakistan Bureau of Statistics (PBS) data.
With the USD 2.8 billion SDR allocation expected from the IMF, the reserves position is expected to consolidate further which is significantly positive given uncertainty over the external account outlook.
Moreover, the result season is ongoing and cyclical sectors are likely to post healthy earnings on a yearly basis driven by the V-shaped economic recovery. The index closed at 47,490 points, (up 435 points week on week).
Sector-wise positive contributions came from i) Commercial Banks (193 points), ii) Oil & Gas Marketing Companies (52 points), and iii) Chemical (52 points). Meanwhile, the sectors that contributed negatively majorly include i) Food & personal care (21 points) and Tobacco (7 points).
Scrip-wise positive contributors were MEBL (84 points), MCB (43 points), and HBL (41 points). Whereas, scrip-wise negative contribution came from LUCK (41 points), PSEL (36 points), and UNITY (19 points).
Foreign buying was witnessed this week of USD 3.1 million against a net sell of USD 5.4 million last week. Buying was witnessed in Technology (USD 1.8 million), Cements (USD 1.3 million) and OMCs (USD 0.2 million). On the domestic front, major selling was reported by Funds (USD 10.6 million) and Insurance (USD 6.1 million). Average volumes clocked-in at 455 million shares (up by 12 per cent week on week) while average value traded settled at USD 85 million (down by 5 per cent week).
