KARACHI: The stock market to maintain upsurge in next week owing to foreign investors’ participation in local bond and equity markets.
Analysts at Arif Habib Limited said that although the market may witness a temporary spell of consolidation, we expect the index to continue its upsurge going forward led by improvement in the macro-economic landscape.
Moreover, augmented participation by foreign and local investors (courtesy improved volumes) in the debt and equity space has also kept the sentiment upbeat. We advise market participants to cherry pick blue chip scrips and keep their view long.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.4x (2020) compared to Asia Pac regional average of 13.6x and while offering DY of ~8.5 percent versus ~2.6 percent offered by the region.
Foreign investment in government backed treasury bills at USD 722 million since the beginning of FY20, attributable to waning concerns on the economic front has effectively supported the slight growth in FX reserves of the SBP (up by 0.5 percent WoW to USD 8,397 million as at 14th November 2019) and consequentially, kept the exchange rate parity stable.
Meanwhile the opposition party – JUIF – has called-off the sit-in in the capital, shielding the political climate from heating up.
This translated to positivity at the domestic equity bourse with the benchmark KSE-100 index closing at 37,584 points this week, generating a return of 4.5 percent WoW (1,606 points).
Sector-wise Positive contributions came from i) Commercial Banks (430 points), ii) Power Generation & Distribution (203 points), iii) Cement (133 points), iv) E&P (127 points), and OMCs (101 points) while negative contributions were led by i) Tobacco (33 points).
Scrip-wise positive contributions were led by HUBC (156 points), HBL (103 points), BAHL (93 points), ENGRO (56 points) and TRG (55 points).
Foreign buying was witnessed this week clocking-in at USD 4.2 million compared to a net buy of USD 4.5 million last week.
Buying was witnessed in fertilizer (USD 5.1 million) and Commercial Banks (USD 3.8 million). On the domestic front, major selling was reported by Banks / DFIs (USD 18.8 million) and Insurance Companies (USD 9.6 million).
Average Volumes settled at 311 million shares (up by 21 percent WoW) while average value traded clocked-in at USD 64 million (up by 17 percent WoW).