Weekly Review: Market likely range bound on IMF talks

KARACHI: The trading activities at the Pakistan Stock Exchange (PSX) likely range bound during the next week over talks between IMF and the Pakistan authorities for release of third tranche.

Analysts at Arif Habib Limited said that the market appears range bound in the mid-term with IMF commencing talks with the Pakistani team next week over release of its third tranche under the $6 billion EFF.

Moreover, local investors await final verdict of the FATF next month whereby decision over Pakistan’s status (White, Grey or Black) will be taken.

With that said, long term prospects appear upbeat given improvement in the external account and stable PKR-USD parity.

The benchmark KSE-100 index of the PSX is currently trading at a PER of 7.2x (2020) compared to Asia Pac regional average of 11.9x and while offering DY of ~6.6 percent versus ~2.8 percent offered by the region.

With fear of contagion of the Chinese Corona virus across the world, global equities staged a slide with the local equity bourse following suit.

This was primarily marked by lower crude prices at the beginning of the week, which kept the index-heavy E&P stocks under pressure. In addition, the SBP kept its benchmark policy rate unchanged in the latest monetary policy statement which triggered select Cement and Steel (leveraged) scrips to tumble during mid-week.

Finally, concerns over rising inflationary readings and political pressure has also kept the index dull. The KSE-100 Index closed at 41,631 points (down by 1,002 points; 2.4 percent WoW).

Sector-wise negative contributions came from i) Commercial Banks (-431ts), ii) Oil & Gas Exploration Companies (-303 points), iii) Power Generation & Distribution (-113 points), iv) Cement (-66 points), and v) Fertilizer (-41 points). Scrip-wise negative contributions were led by MCB (-126 points), PLL (-108 points), UBL (-97 points), HBL (-96 points) and HUBC (-95 points).

Foreign selling this week clocking-in at USD 8.0 million compared to a net buy of USD 4.8 million last week. Selling was witnessed in Cement (USD 4.2 million) and Textile composite (USD 1.3 million).

On the domestic front, major buying was reported by Individuals (USD 9.8 million) and Broker Proprietary Trading (USD 2.0 million). Average Volumes settled at 188 million shares (down by 1 percent WoW) while average value traded clocked-in at USD 46 million (down by 7 percent WoW).

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