KARACHI: The stock market likely to perform well on expectations of growth in various accounts, including commencement of tight monetary stance.
Analysts at Arif Habib Limited said that the market to perform well in 2021/2022 on account i) robust earnings growth forecast of cement, steel and allied sectors amid strong cyclical demand driven by historic high PSDP allocation and focus on Naya Pakistan Housing scheme, ii) expectation of an Auto and Refinery policy, iii) downwards sticky oil prices supporting the E&P sector, and iv) commencement of monetary tightening which should once again garner interest in commercial banks.
The benchmark KSE-100 of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.9x (2021) compared to Asia Pac regional average of 16.5x while offering a dividend yield of ~6.9 per cent versus ~2.3 per cent offered by the region.
The market remained range bound this week with volatile trading on account of June-end closing and adjustment of portfolios. Moreover, as the debate on the Federal Budget moved towards final stages in the Parliament, some stiffness was witnessed in the political climate.
Albeit, the Budget was passed with a majority vote. The market also gained momentum on the first day of the new fiscal year, erasing previous losses. The index closed at 47,686 points, up by 0.2 per cent / 83 points WoW.
Sector-wise positive contributions came from i) Technology (105 points), ii) Pharma (68 points), iii) Food and Personal care (51 points), iv) Tobacco (22 points), and v) Insurance (14 points). Whereas, the sectors that contributed negatively include Commercial Banks (46 points), Power Generation & Distribution (44 points), Oil & Gas Exploration Companies (39 points), Oil & Gas Marketing (36 points) and Refinery (18 points). Scrip-wise positive contributors were TRG (88 points), AGP (54 points), LUCK (41 points), UNITY (37 points) and MEBL (25 points). Scrip-wise negative contributors were HBL (67 points), HUBC (65 points), UBL (38 points), OGDC (35 points) and HASCOL (34 points).
Foreign selling continued this week clocking-in at USD 8.4 million compared to a net sell of USD 7.9 million last week. Selling was witnessed in Commercial Banks (USD 3.2 million) and Other sectors (USD 1.4 million). On the domestic front, major buying was reported by Individuals (USD 13.6 million and Companies (USD 13.4 million). Average volumes arrived at 622 million shares (down by 10 per cent WoW) while average value traded settled at USD 107 million (down by 4 per cent WoW).
