Weekly Review: market likely to stay range bound

Weekly Review: market likely to stay range bound

ISLAMABAD: The stock market likely to stay range bound during the next week owing to scheduled announcement of the monetary policy statement

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

The monetary policy is scheduled on December 14, 2021, where the analysts project a hike of 100 basis points. Any increase in the benchmark policy rate exceeding that will further dampen the sentiment for highly levered stocks.

Furthermore, mini Budget is expected in the near future, where market will react to any introduction, re-imposition or removal of duties and subsidies.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.6x (2022) compared to Asia Pac regional average of 14.9x while offering a dividend yield of 8.8 per cent versus 2.2 per cent offered by the region.

The market commenced on a negative note, carrying the dullness from last week on account of widening of trade deficit and surge in inflation while an alleged Omicron case in Karachi further deteriorated the sentiment.

The momentum changed after news regarding the new COVID variant was deemed none lethal. Moreover, encouraging cement dispatches (displaying a 7 per cent YoY jump in November 2021) along with expectation of resolution of gas circular debt, kept the momentum positive at the index.

However, the rally could not be extended as nervousness took over in light of hike in policy rate tagged with continuous depreciation of Pak Rupee against USD (making a new low of PKR 177.71). Albeit, the market closed at 43,396 points, gaining 163 points (up by 0.38 per cent) WoW.

Sector-wise positive contributions came from i) Oil & Gas Exploration Companies (320 points), ii) Technology & Communication (257 points), iii) Food & Personal Care Products (32 points), iv) Chemical (29 points), and v) Insurance (10 points). Whereas, sectors which contributed negatively were i) Commercial Banks (187 points) and ii) Cement (112 points). Scrip-wise positive contributors were TRG (208 points), PPL (155 points), OGDC (101 points), SYS (49 points) and MARI (34 points). Meanwhile, scrip-wise negative contribution came from ENGRO (66 points), HBL (64 points) and UBL (44 points).

Foreign selling continued this week, clocking-in at USD 1.0 million compared to a net sell of USD 62.84 million last week. Major selling was witnessed in Cement (USD 1.2 million), Fertilizer (USD 0.5 million) and E&P (USD 0.3 million).

On the local front, buying was reported by Other Organizations (USD 3.9 million) followed by Companies (USD 2.1 million) and Individuals (USD 1.3 million). Average volumes clocked-in at 204 million shares (down by 36 per cent WoW) while average value traded settled at USD 42 million (down by 54 per cent WoW).