Weekly Review: market likely move positive on improvement economic indicators

Weekly Review: market likely move positive on improvement economic indicators

KARACHI: The stock exchange likely to move positive during upcoming week on the back of improved macro-economic front.

Analysts at Arif Habib Limited said that the market to remain green due to reasons included: improvement on the macro-economic front amid reduction in trade deficit (rising exports and decreasing imports); strengthening PKR/USD parity; no expectation of immediate rate hike; and robust dispatches reported by cyclical sectors.

On the other hand, upcoming auto data (released by PAMA) is expected to attract investors’ interest in the automobile sector.

However, a surprise swing in the US elections may disrupt global investors’ confidence together with rising global coronavirus cases as daily cases crossed 600,000 mark for the first time on November 05, 2020, exerting pressure on countries to impose a lockdown.

The benchmark KSE-100 is currently trading at a PER of 7.2x (2021) compared to Asia Pac regional average of 14.1x while offering a dividend yield of ~6.2 percent versus ~2.6 percent offered by the region.

This week trading commenced on a negative note and the index nosedived by 776 points on Monday due to i) continuous surge in Covid-19 cases together with rising infection ratio from 2 percent per day to 4 percent, ii) dismissal of review petition on GIDC case by the Honorable supreme court, and iii) budding pressure on global equities and commodities in anticipation of the US presidential election.

However, the negative performance was short lived as the index displayed a rebound on Tuesday and increased by 1,369 points (highest day increase after April 17, 2020) as i) nation-wide lockdown was ruled out by the NCOC, ii) announcement of an electricity relief package for industrial sector by Prime Minister, iii) CPI at 8.9 percent (lower then anticipation), and iv) recovery in global equities with Biden in the lead in US elections.

As a result, the KSE-100 index closed at 40,732 points, up by 844 points or 2.11 percent WoW.

Contribution to the upside was led by i) Commercial Banks (203 points), ii) Oil and Gas Exploration Companies (149 points), iii) Technology and Communication (97 points), iv) Cement (74 points), and v) Fertilizer (57 points). Scrip-wise major gainers were POL (90 points), TRG (83 points), MEBL (61 points), BAFL (35 points), and HMB (33 points). Whereas, scrip-wise major losers were HBL (38 points), FFC (14 points) PAKT (13 points), MUREB (6 points) and APL (6 points).

Foreigners offloaded stocks worth of USD 5.50 million compared to a net sell of USD 21.34 million last week. Major selling was witnessed in Commercial Banks (USD 3.46 million) and E&P (USD 1.86 million). On the local front, buying was reported by Individuals (USD 5.37 million) followed by Insurance Co. (USD 3.63 million). That said, average daily volumes and traded value for the outgoing week were down by 21 percent and 20 percent to 368 million shares and USD 79 million, respectively.