Weekly Review: market likely remain range bound

Weekly Review: market likely remain range bound

KARACHI: The stock market likely to stay range bound in coming week owing to ease in lockdown.

Analysts at Arif Habib Limited said that the market to remain range bound in the coming week.

With standard operating procedures in place, lockdown will be easing off next week, business community and economy will get a sigh of relief.

Whereas, given foreign reserves clocking-in at USD 18.8 billion, up by USD 292 million WoW, Pak Rupee is expected to remain stable against the greenback (which is a major positive for foreign investment).

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.0x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of ~8.4 percent versus ~3.1 percent offered by the region.

Market commenced on a negative note this week, with investors resorting to profit taking.

With a massive fall in exports by 54 percent YoY in last month followed by a fall in cement dispatches by 24 percent YoY in April 2020 amid lockdown weak sentiment prevailed.

Furthermore, IMF’s prediction regarding total foreign reserves depletion by USD 1.9 billion in the coming 15 months added fuel to this decline.

Moreover, 12 month T Bill cut off yield climbed up by 28 basis points. Meanwhile, Federal Govt.’s decision to ease off lockdown from Saturday and onwards was not received well given alarming jump in COVID-19 cases on day-on-day basis.

Whereas, announcement of reduction in RLNG prices for the month of May 2020 cushioned the dip.

The KSE-100 index settled at 33,268 points, shedding 884 points (down by 2.5 percent) WoW.

Sector-wise negative contributions came from i) Commercial Banks (231 points), ii) Cement (211 points), iii) Power Generation & Distribution (156 points), iv) Fertilizer (148 points) and Oil & Gas Exploration Companies (99 points).

Meanwhile, sector-wise positive contribution came from i) Oil and Gas Marketing Companies (76 points), Food & Personal Care Products (34 points) and Technology & Communication (21 points). Scrip-wise negative contributions were led by HUBC (126 points), LUCK (102 points), HBL (82 points), FFC (76 points) and MCB (74 points).

Foreign selling continued this week clocking-in at USD 17.8 million compared to a net sell of USD 11.6 million last week.

Selling was witnessed in Exploration & Production (USD 7.1 million) and Commercial Banks (USD 5.1 million).

On the domestic front, major buying was reported by Individuals (USD 20.3 million) and Companies (USD 5.7 million).

Average Volumes settled at 190 million shares (up by 7 percent WoW) while average value traded clocked-in at USD 46 million (down by 5 percent WoW).