Weekly Review: market likely gain as lockdown eases

KARACHI: The share market to remain green due to easing of lockdown in the country which will revive economic activity.

Analysts at Arif Habib Limited said that moreover, SBP announced 100 basis points reduction in policy rate to cushion economic fallout amid lower inflationary readings on account of slowdown in demand and decline in fuel prices which may fuel bullish sentiments.

That said, rising cases of Coronavirus in Pakistan may again lead to a strict lockdown which would once again put pressure on the index.

Investors may opt for profit taking in upcoming week before Eid Holidays.

The benchmark KSE-100 of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.1x (2020) compared to Asia Pac regional average of 10.2x while offering a dividend yield of 8.2 percent versus 3.1 percent offered by the region.

This past week, the benchmark equity bourse (KSE-100) sustained the 33,000 level and exhibited gains on 5 out of 5 trading sessions (this has happened after 26 weeks).

Reasons for the positive sentiment include: i) Softening of lockdown announced by federal and provincial governments helped to increase domestic business activity including opening of industries, ii) Pakistan weight in MSCI EM index remained unchanged, iii) Government announced construction of Diamer-Bhasha Dam that will generate demand for Cement and Steel, and iv) Expectation of further rate cut improved activity in highly levered stocks.

However, Commercial Banks felt the heat on account of expectation of further rate cut which may stress profitability of the banking sector.

As a result, the KSE-100 index closed at 34,008 points, up by 741 points or 2.2 percent WoW.

Contribution to the upside was led by i) Oil and Gas Exploration Companies (192 points), ii) Cements (177 points), iii) Fertilizer (148 points), iv) Food and Personal Care Products (61 points), and v) Technology and Communication (57 points). Scrip wise major gainers were FFC (74 points), MARI (73 points), LUCK (66 points), NESTLE (59 points), and OGDC (56 points). Whereas, scrip wise major losers were BAHL (40 points), SNGP (35 points) ABL (20 points), INDU (17 points) and PAKT (14 points).

Foreigners offloaded stocks worth of USD 10.91 million compared to a net sell of USD 17.82 million last week.

Major selling was witnessed in Commercial Banks (USD 2.89 million) and Power Generation and Distribution (USD 2.40 million).

On the local front, buying was reported by Individuals (USD 5.56 million) followed by Mutual Funds (USD 4.97 million). That said, average daily volumes for the outgoing week were up by 15 percent to 219 million shares whereas value traded decreased by 13 percent to USD 40.3 million.

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