Weekly Review: Market likely to move in green zone

Weekly Review: Market likely to move in green zone

KARACHI: The stock market likely to maintain positive trend during the next week after the surprise cut in policy rate and approval of $1.38 billion emergency loan by IMF.

Analysts at Arif Habib Limited said that the market to hover in the green zone next week as the cabinet has granted approval to an Ordinance providing incentives for the construction industry.

Whereas slow growth of Coronavirus cases in Pakistan may also fuel bullish sentiments.

On the other hand, we might see further appreciation in PKR against green as foreign selling in debt securities has largely been subdued, inclusion of Pakistan by G20 in its debt relief plan which might reduce debt repayment pressure, and disbursement of funds from the IMF which may aid foreign exchange reserves.

Trading commenced on a negative note this week as the OPEC+ announced a production cut that remained inefficient to offset the expected drop in demand amid COVID-19, which resulted in a decline in international oil prices.

On the other hand, the Sindh government announced a more severe lockdown on account of rising cases in the province which dampened investor’s sentiments.

However, sentiment reversed direction on the last trading day whereby steep gains were witnessed in the wake of i) 200bps cut in the benchmark rate to 9 percent by the State Bank in an emergency unscheduled meeting, ii) approval of a USD 1.4bn fund by the IMF for Pakistan, iii) sharp decline in 10-year PIB’s yield from 8.65 percent to 7.7 percent, and iv) 2 percent appreciation in the PKR against USD.

As a result, the benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,832 points, up by 799 points or 2.5 percent WoW.

Contribution to the upside was led by i) Fertilizer (405 points), ii) Cements (170 points), iii) Pharmaceuticals (127 points), iv) Textile Composite (59 points), and v) Automobile Assemblers (51 points). Scrip wise major gainers were DAWH (143 points), FFC (125 points), ENGRO (108 points), LUCK (80 points), and SEARL (43 points). Whereas, scrip wise major losers were NESTLE (97 points), UBL (56 points) HBL (55 points), BAFL (54 points) and BAHL (32 points).

Foreigners offloaded stocks worth of USD 14.24 million compared to a net sell of USD 16.22 million last week. Major selling was witnessed in Commercial Banks (USD 3.79 million) and Fertilizer (USD 3.03 million).

On the local front, buying was reported by Insurance Companies (USD 6.80 million) followed by Companies (USD 4.53 million).

That said, average daily volumes for the outgoing week were down by 4 percent to 178 million shares likewise value traded decreased by 10 percent to USD 37.8 million.