Weekly Review: jittery sentiments likely

Weekly Review: jittery sentiments likely

KARACHI: Investors’ sentiments are likely jittery during the next week owing to measures taken by the government to curtail import bill.

Analysts at Arif Habib Limited said that with the government making all efforts to restrict imports, tax collection (silver lining in the domestic economic climate at the moment), may also be hurt.

Market sentiments may be tested once again with the government proposing a hike in gas/electricity tariffs.

However, the resumption of the IMF program next month could provide a breather.

The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.3x (2021) compared to Asia Pac regional average of 14.4x while offering a dividend yield of 8.1 per cent versus 2.3 per cent offered by the region.

This week marked the current fiscal year’s worst-performing week to date (second on CY basis), the equity bourse closed at 45,074 points (down by 3.4 per cent / 1,563 points WoW).

Amid rising demand and the upcycle in international commodities exacerbating the deficit on the external front, raising red flags over future CPI readings and building pressure on the Pak Rupee, the SBP commenced tapering its monetary stimulus.

A 25 basis points hike in the policy rate, shifting the focus from prioritizing growth to now ensuring sustainability, was put into effect to stop the economy from overheating.

While the government also adopted other measures to curtail demand such as tightening regulatory and consumer financing policies for auto consumers. Hence, investors remained on the edge.

Sector-wise negative contributions came from i) Technology (275 points), ii) Cement (196 points), iii) Commercial banks (148 points), iv) Fertilizer (137 points), and v) E&P (134 points). Whereas, sectors which contributed positively were i) Miscellaneous (41 points), and ii) Chemical (3 points). Scrip-wise negative contributors were TRG (142 points), SYS (124 points), HBL (71 points), OGDC (70 points) and PPL (55 points). Meanwhile, scrip-wise positive contribution came fr om PSEL (46 points), MCB (18 points) and BAFL (15 points).

Foreign buying was witnessed this week, settling at USD 6.7 million compared to a net sell of USD 10.9 million last week. Major buying was witnessed in Other Sectors (USD 6.1 million), Technology and Communication (USD 3.0 million) and Oil and Gas Marketing Companies (USD 1.8 million). On the local front, selling was reported by Individuals (USD 7.5 million) followed by Companies (USD 3.5 million). Average volumes clocked-in at 384 million shares (down by 4 per cent WoW) while average value traded settled at USD 73 million (down by 18 per cent WoW).

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