Weekly Review: Stock market to remain positive on improved macroeconomic position

KARACHI: The stock market to remain positive during next week owing to inflows in treasury bills and improved macroeconomic position of the country, analysts said.

Analysts at Arif Habib Limited hoped that market to remain positive on the back of improving macroeconomic position, country witnessing foreign net inflows in T-bills to USD 1,154 million in FY20TD, declining fixed income yields, improvement in ease of doing business, stable market determined exchange rate since last four months around 156/USD, and likelihood of monetary easing to start soon.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.7x (2020) compared to Asia Pac regional average of 13.5x while offering a dividend yield of ~8.1 percent versus ~2.6 percent offered by the region.

During the outgoing week trading commenced on a positive note attributable to State Bank leaving discount rate unchanged which bode well for local bourse. However, the index lost -400 points on Tuesday as Honorable Supreme Court took notice on Army Chief’s appointment.

Meanwhile, index recovered after considering this appointment as a procedural issue along with continuous surge in foreign investment in T-Bills which crossed USD 1bn mark leading to rising foreign exchange reserves improving investor’s sentiments.

As a result, the benchmark KSE-100 index crossed 39K mark after eight months and closed at 39,288 points, increasing by 1,362 points or 3.59 percent WoW. During Nov’19, KSE-100 index increased by 5,084 points or 14.9 percent MoM (this is highest ever monthly return after May’13).

Contribution to the upside was led by i) Commercial Banks (+522 points) due to attractive valuation, ii) Cement (+120 points) amid robust sales numbers, iii) Fertilizer (+116 points), iv) Automobile Assemblers (+80 points), and v) Chemicals (+75 points).Scrip wise major gainers were HUBC (+132 points), FFC (+94 points), PSO (+40 points), LUCK (+32 points), and NATF (+29 points). Whereas, scrip wise major losers were HBL (-63 points), BAHL (-26 points), and PIBTL (-15 points).

Foreign offloaded stocks worth of USD 8.06 million compared to a net buy of USD 8.46 million last week. Major selling was witnessed in Cements (USD 3.36 million) and E&P (USD 1.95 million).

On the local front, buying was reported by Mutual Funds (USD 11.06 million) followed by Individuals (USD 7.30 million). That said, average daily volumes for the outgoing week were up by 5 percent to 348 million shares likewise value traded increased by 8 percent to USD 80 million.

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