Weekly Review: market likely stay positive as lockdown ends

KARACHI: The stock market likely stay positive during next week as smart lockdown is officially ending from Monday August 10, 2020, analysts said.

Analysts at Arif Habib Limited said that the market to remain positive in the upcoming week. With smart lockdown officially ending on Monday, investor sentiment is set to be positive, although this remains contingent upon containment of COVID-19 cases.

Furthermore, Pak Rupee is expected to remain stable against the USD given augmenting reserves. Moreover, with continuing result season, certain sectors and scrips are expected to stay under limelight.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.2x (2021) compared to Asia Pac regional average of 13.5x and while offering DY of ~6.2 percent versus ~2.7 percent offered by the region.

The market commenced on a positive note given further decline in COVID-19 cases post Eid ul Adha. However, bears took over after higher than expected inflation of 9.30 percent was reported.

Although this was short lived as the market rebounded the very next day amid release of cement offtake data for Jul’20, depicting a stunning jump of 41 percent YoY followed by decline in trade deficit (by 15 percent YoY in Jul’20) and surge in SBP’s foreign reserves (by USD 567 million on weekly basis).

Moreover, approval of key projects (ML-1 Railway upgradation worth PKR 11.44 trillion under CPEC by ECNEC along with 4 projects by CDWP worth PKR 16.1 billion) kept the momentum strong. The market closed at 40,030 points, up by 772 points (+2 percent) WoW.

Foreign buying this week clocking-in at USD 3.7 million compared to a net sell of USD 9.7 million last week. Buying was witnessed in Fertilizer (USD 2.2 million) and Cement (USD 2.0 million). On the domestic front, major selling was reported by Insurance Companies (USD 29.4 million and Mutual Funds (USD 11.9 million). Average volumes settled at 638 million shares (up by a massive 64 percent WoW) while average value traded clocked-in at USD 145 million (up by 43 percent WoW).

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