Weekly Review: corporate profitability may keep market in green

Weekly Review: corporate profitability may keep market in green

KARACHI: The stock market may move in green owing to ongoing result season, whereby corporate profitability appears strong.

Analysts at Arif Habib Limited said that in addition, improved liquidity in the market (translating in augmented volumes / value), will also keep the index trajectory positive.

Albeit, a key event next month includes FATF’s meeting to determine Pakistan’s status (exist from the grey list or status quo), where some volatility may be observed.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.7x (2021) compared to Asia Pac regional average of 16.7x and while offering DY of around 6.4 percent versus 2.7 percent offered by the region.

In recent times, buoyancy at the index has been a superlative for strength of the market to power through times of deep uncertainty.

This week marks the end of 1MCY21, with the equity bourse closing at 46,386 points, up by 1.1 percent / 518 points WoW.

The benchmark KSE-100 index closed positive on 4 out 5 sessions led by unchanged policy rate and cautious stance of the Governor SBP signaling at maintenance of a status quo in the monetary policy followed by a very gradual and measured tightening, if need be.

Moreover, uptick in International crude prices in earlier part of the week as well as hike in cement prices in North kept E&P, OMC’s and Cements under limelight. Albeit, meltdown in global equities on Thursday amid lower than expected earnings of major tech companies, and debate over US stimulus package translated to the local bourse.

However, a quick recovery was observed on Friday in lieu of the ongoing result season.

In the market, sector-wise positive contributions came from:

i) Cement (326 points) given price hike in North,

ii) Technology & Communication (201 points) amid foreign interest witnessed during the week,

iii) Pharmaceuticals (70 points), and

iv) Power Generation & Distribution (60 points).

Whereas sectors that contributed negatively include

i) Commercial Banks (166 points),

ii) Oil & Gas Exploration Companies (81 points), and

iii) Fertilizer (54 points).

Top scrip wise contributors were TRG (216 points), LUCK (84 points), and FCCL (59 points).

Foreign selling continued this week clocking-in at USD 9.1 million compared to a net buy of USD 5.5 million last week. Selling was witnessed in Commercial Banks (USD 2.7 million) and Technology (USD 2.6 million).

On the domestic front, major buying was reported by Individuals (USD 8.7 million and Companies (USD 8.1 million). Average volumes arrived at 674 million shares (up by 33 percent WoW) with over a billion shares traded on the last two consecutive days of the week. Whereas, average value traded settled at USD 169 million (up by 44 percent WoW).