Weekly Review: PSX stabilization fund to keep positive sentiments

KARACHI: Stock market likely positive in the upcoming weeks amid activation of a PSX stabilization fund in the foreseeable future, analysts said.

This sentiment with also continue along with contraction in the Current Account Deficit (CAD) by 27 percent in 10MFY19 which may improve investor sentiments, analysts at Arif Habib Limited said.

However, they said, economic concerns are still hovering around for instance endless slide of Pak Rupee against the greenback and further rate hikes expected with inflation expected to tick higher post adjustment in utility prices (gas and electricity tariff hike).

This week trading commenced on a positive note despite a 150 basis points hike by the State Bank of Pakistan on Monday, which was higher than consensus expectation of 100 basis points.

To note, revival of investors’ confidence came on the back of a meeting held between stock brokers and Advisor to Prime Minister on Finance Hafeez Sheikh to form a PSX support fund for market stabilization along with approval of deferred oil payment facility of $3.2 billion with Saudi Arabia which will ease pressure on balance of payments’ and foreign exchange reserves.

The market is expecting a fund size of Rs17-20 billion, similar to one launched in 2009, which may invest in government owned companies in the upcoming weeks.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) rebound and posted a positive return after seven weeks to close at 35,704 points, up by 2,537 points (highest increase in terms of points) or 7.65 percent WoW (10-year high return in terms of percentage).

Contribution to the upside was led by i) Fertilizer (+524 points), ii) Commercial Banks (+494 points), iii) Cements (+314 points), iv) Oil and Gas Marketing Companies (+273 points), and v) Oil and Gas Exploration Companies (+273 points).

Scrip wise major gainers were ENGRO (+172 points), LUCK (+167 points), FFC (+157 points), PSO (+136 points), and POL (+120 points).

Foreign buying continued this week clocking-in at USD 0.02mn compared to a net buy of USD 8.21 million last week.

Major buying was witnessed in Cement (USD 2.19 million) and Commercial Banks (USD 1.44 million). On the local front, selling was reported by Insurance Companies (USD 6.01 million) followed by Mutual Funds (USD 5.64 million).

That said, average daily volumes for the outgoing week were significantly up by 66 percent to 178 million shares likewise value traded increased by 44 percent to USD 40 million.

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