KARACHI: A possible strict lockdown due to rise in coronavirus cases in the country may put pressure on the stock market during next week.
Analysts at Arif Habib Limited said that the National Command and Operation Center (NCOC) had instructed stricter restrictions and shorter working hours, while a complete lockdown is still a possibility.
This could potentially continue to add pressure to the market next week.
The ongoing third wave of the novel coronavirus is likely to keep sentiment under pressure, while in addition to a strong results season (particularly cyclical sectors) we may see the market react on a positive note in the upcoming week.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.6x (2021) compared to Asia Pac regional average of 16.0x while offering a dividend yield of ~7.4 percent versus ~2.6 percent offered by the region.
The week commenced on a positive note on Monday due to heavy investment from a major fund. For the remainder of the week the index was under pressure due to rise in the infection ratio, lockdowns in certain areas of the country and reduced business timings.
Finally, a discussion of a possible complete lockdown is still on the cards which added extra pressure to the index. On a positive note inflows to foreign exchange through the Roshan Digital Account (RDA) crossed the USD 1bn this week, while the Current Account posted a nominal deficit of USD 47 million for March 2021. The KSE-100 Index closed the week at 44,262 points, declining 445 points WoW.
Sector-wise negative contributions came from i) Technology & Communication (110) ii) Cement (95), iii) Tobacco (555 points), iv) Engineering (49 points) and v) Automobile Assembler (43 points).
Whereas sectors that contributed positively include i) Textile Composite (25 points), and ii) Chemical (16 points). Scrip-wise negative contributors were TRG (82 points), MCB (65 points), PAKT (55 points), NBP (39 points) and INIL (31 points) while positive contributors included HBL (48 points), BAHL (36 points), FFC (34 points), COLG (31 points) and UBL (24 points).
Foreign selling this week clocking-in at USD 13.1 million compared to a net buy of USD 7.3 million last week. Selling was witnessed in Commercial Banks (USD 4.8 million) and Technology and Communication (USD 1.5 million).
On the domestic front, major buying was reported by Other Organization (USD 16.1 million) and Mutual Funds (USD 13.4 million). Average volumes arrived at 331 million shares (down by 0.5 percent WoW) while average value traded settled at USD 110 million (up by 14 percent WoW).
