Weekly Review: stock market to remain positive on rate cut hopes

KARACHI: The stock market to remain positive during next week owing to hopes of rate cut by the central bank on latest inflation numbers.

Analysts at Arif Habib Limited on Saturday forecast that the market to remain positive on the back of expectation of a rate cut earlier than prior estimates after recent reduction in inflationary reading (Monetary Policy Statement due in last week of September 2019).

On the other hand, government’s focus to manage twin deficit and domestic tax collection which increased by 28 percent, should trigger economic stability.

However, FATF meeting is scheduled on the September 09, 2019, to discuss Pakistan’s progress to control terror financing by undertaking corrective measures, whereby any undesirable news on this issue could pose risk to the market performance.

This week trading commenced on a positive note post issuance of a presidential ordinance on GIDC.

Whereas SECP undertook major reforms to rejuvenate the capital market and promote ease of doing business.

On the other hand, change in CPI methodology revealed a lower than anticipated reading by 114 basis points of 10.49 percent in August 2019 which increases the likelihood of a policy rate cut.

Furthermore, stability was witnessed in the PKR-USD parity. As a result, the benchmark KSE-100 index closed above 30,000 mark at 30,467 points, increased by 795 points or 2.68 percent WoW.

Contribution to the upside was led by i) Oil and Gas Exploration Companies (+299 points) amid rising international oil prices WoW, ii) Commercial Banks (+152 points), iii) Power Generation and Distribution (+103 points), iv) Oil and Gas Marketing Companies (+75 points), and v) Fertilizer (+49 points).

Scrip wise major gainers were HBL (+127 points), OGDC (+126 points), PPL (+118 points), HUBC (+87 points), and POL (+41 points).

Whereas, scrip wise major losers were MEBL (-32 points), THALL (-19 points), and HASCOL (-12 points).

Foreigner’s offloaded stocks worth USD 5.32 million compared to a net buy of USD 0.97 million last week.

Major selling was witnessed in Commercial Banks (USD 3.05 million) and Cements (USD 2.44 million).

On the local front, buying was reported by Individuals (USD 6.15 million) followed by other organizations (USD 4.10 million).

That said, average daily volumes for the outgoing week were down by 25 percent to 93 million shares likewise value traded decreased by 23 percent to USD 22.3 million.

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