Weekly Review: lower COVID cases to boost investors confidence

KARACHI: The equity market likely to stay positive in the coming week owing to fall in corona cases during past couple of days.

Analysts at Arif Habib Limited said that the market to remain positive in the upcoming week.

With COVID-19 cases reducing on daily basis along with higher recovery rate we expect investor confidence to improve.

Given further inflow of funds, SBP’s foreign reserves are expected to swell up, which will stabilize Pak Rupee/USD parity.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.4x (2020) compared to Asia Pac regional average of 12.9x and while offering DY of 6.4 percent versus 2.8 percent offered by the region.

The market commenced on a positive note this week amid rally in OMC scrips due to rise in petroleum prices last week, followed by increase in international oil prices (leading to upward movement in E&P scrips).

Furthermore, approval of Federal Budget 2020-21 in National Assembly, monetary funding worth USD 500 million from World Bank and loan from Chinese Banks of USD 1.3 billion led to higher investor sentiment.

Moreover, inflation for June 2020 of 8.59 percent remained in line with expectations. Besides this, urea offtake surging to 76 percent MoM in June 2020 added fuel to the sentiment.

Additionally, foreign reserves of SBP jumped up to USD 11.23 billion given monetary funds from multilateral institutions last week, after which PKR/USD parity settled at PKR 166.21.

The market settled at 35,051 points, gaining 1,112 points (up by 3.3 percent) WoW.

Sector-wise positive contributions came from i) Commercial (176 point), ii) Cements (170 point), iii) Oil & Gas Exploration Companies (140 point), iv) Fertilizer (136 point) and v) Technology & Communication (85 point). However, sector-wise negative contribution came from i) Automobile Parts & Accessories (7 point) and ii) Textile Spinning (4 point). Scrip-wise positive contributions were led by LUCK (107 point), OGDC (81 point), MCB (72 point), TRG (59 point) and PSO (50 point).

Foreign selling continued this week clocking-in at USD 20.5mn compared to a net sell of USD 9.9mn last week. Selling was witnessed in Commercial Banks (USD 8.8 million) and E&P (USD 3.9 8.8 million). On the domestic front, major buying was reported by Insurance Companies (USD 17.5 8.8 million) and Companies (USD 9.6 8.8 million).

Average Volumes settled at 251 8.8 million shares (up by 42 percent WoW) while average value traded clocked-in at USD 51 8.8 million (up by 45 percent WoW).

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