Weekly Review: Market to positively respond to IMF talks

KARACHI: The equity market likely to stay positive in coming weeks as the expected staff level meeting of IMF is scheduled in April 2019.

Analysts at Arif Habib Limited said that this will revive the market sentiment.

Moreover, interest rate is expected to peak following another 50 basis points hike in May 2019; which will bring clarity to the investors.

On the currency front, the analysts expect the Pak Rupee to settle at 147/USD by June 2019.

Moreover, result of offshore drilling at Indus offshore block G ‘Kekra-1’ is also expected within six weeks, where materialization of oil / gas discovery will drive the market in general and OGDC and PPL in particular.

The analysts said that this week trading commenced on a negative note despite China depositing USD 2.2 billion to support the balance of payments position and depleting foreign exchange reserves which crossed the USD 17 billion mark.

Market activity remained depressed on the back of i) 50bps increase in policy rate augmenting pressure on leveraged industries, ii) higher than expected inflationary readings; at 9.41 percent YoY in March 2019 (5-year high), iii) continuous depreciation of PKR against the Greenback, iv) delay in finalisation of the IMF program which is now expected by May, and v) projected slowdown by the Asian Development Bank of Pakistan’s GDP to 3.9 percent.

The benchmark KSE-100 of Pakistan Stock Exchange (PSX) closed at CY19’s lowest level of 37,522 points, down by 1,128 points or 2.92 percent WoW.

Contribution to the downside was led by i) Commercial Banks (-383 points) due to foreign selling, ii) Fertilizer (-134 points) amid announcement of 100,000 tons of urea import, iii) Oil and Gas Marketing Companies (-35 points) on account of slowdown in petroleum off-take by 17 percent YoY in Mar’19, iv) Pharmaceuticals (-92 points), and v) Power Generation and Distribution (-67 points). Scrip wise major losers were HBL (-122 points), UBL (-71 points), PPL (-58 points), ENGRO (-51 points), and PSO (-47 points). While the only sector that contributed positively to the index was Miscellaneous (+57 points).

Foreign selling witnessed this week clocked in at USD 3.7 million compared to a net buy of USD 0.5 million last week.

Major selling was witnessed in Fertilizer (USD 1.6 million) and Power Generation (USD 1.6 million).

On the local front, buying was reported by Individuals (USD 5.5 million) followed by Banks / DFIs (USD 4.7 million).

That said, average daily volumes for the outgoing week were down by 7.5 percent to 118.7 million shares likewise value traded declined by 20.4 percent to USD 24.9 million.

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