Weekly Review: market likely to stay range bound due to Ramazan

Weekly Review: market likely to stay range bound due to Ramazan

KARACHI: The trading activities in the stock market likely to stay range bound during next week due to commencement of the holy month of Ramazan.

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

With commencement of the month of Ramazan, volumes may dry down. While extension in lockdown by the Federal government to contain the spread of Corona may also build pressure on businesses and keep sentiment at the index lackluster.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.9x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of around 8.5 percent versus around 3.1 percent offered by the region.

The market commenced on a positive note, continuing the unpreceded rally witnessed on last Friday over SBP’s surprise rate cut of 200bps.

Albeit, the euphoria was short lived with investors parring earlier gains as banks felt the heat of compression in NIMs while oil scrips tanked with international oil prices.

The local bourse displayed a mixed trend for the remainder of the week. Initially leveraged stocks gained traction (cements and steel; amid rate cut and news of potential price hikes) but market participants resorted to profit-taking by week-end as results disappointed.

Whereas sentiment of the banking sector was eroded with the State Bank barring banks from declaring dividends in the March and June quarter of the ongoing year so as to conserve capital.

Albeit, large banks posted gains the following day on clarity regarding disbursement provision in case of board approved dividends for the outgoing quarter. With that said, the KSE-100 closed at 32,806 points (down by 0.08 percent / 25 points WoW).

Sector-wise negative contributions came from i) Oil & gas exploration companies (-48.6 points), ii) Power generation and distribution (-43.8 points), and iii) Commercial banks (-43.5 points).

While positive contributions were led by i) Cement (128.2 points), ii) Fertilizer (63.9 points), and iii) Automobile assemblers (34.0 points).

Foreign offloading during the week arrived at USD 2.5 million compared to a net sell of USD 14.2 million last week. Selling was witnessed in Fertilizer (USD 4.8 million) and Banks (USD 4.1 million).

On the domestic front, major selling was reported by Individuals (USD 11.7 million) and Broker Proprietary (USD 4.7 million). Average Volumes settled at 261 million shares (up by 46.3 percent WoW) while average value traded clocked-in at USD 71 million (up by 88.5 percent WoW).