KARACHI: The stock market likely to trade bullish during the next week on expectations of relief in the upcoming budget 2021/2022 such as reduction in duties on imported raw material etc.
Analysts at Arif Habib Limited hoped that the market to remain bullish in the upcoming week amid expectation of relief in the upcoming budget, reduction in duties on imported raw material for construction sector and export oriented sector to spur growth which might keep these sectors in limelight.
On the other hand, E&Ps scrips are expected to continue performing well due to higher international oil prices and government shelving divestment plan of E&Ps scrips.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.0x (2021) compared to Asia Pac regional average of 16.3x while offering a dividend yield of ~6.9 percent versus ~2.6 percent offered by the region.
The outgoing week trading commenced on a positive note with the index increasing by 182 points on Monday. The uptrend was driven by NAC’s provisional data on GDP growth which is projected at 3.94 percent in FY21. Optimism at the bourse was further fueled by
i) Current account posting a surplus of USD 773 million in 10MFY21,
ii) Government cancelling its divestment plan for PPL and OGDC as well as higher oil prices WoW resulting in heavy buying in these scrips,
iii) MSCI rebalancing on Thursday resulting in foreign buying, and
iv) Pakistan developing a local COVID-19 vaccine.
Likewise, technology sector gained traction amid re-rating of sector multiple along with expectation of relief in the upcoming budget resulted in massive activity in the sector.
With that said, PSX posted a hat-trick this week (record volumes on three consecutive days). The KSE-100 index closed at 47,126 points, up by 1,211 points or 2.64 percent WoW.
Sector-wise positive contributions came from i) Commercial Bank (456 points) ii) Oil & Gas Exploration Companies (163 points), iii) Cements (131 points), iv) Technology & Communication (120 points) and v) Fertilizer (89 points). Meanwhile, the sectors that contributed negatively include Tobacco (26 points) and Chemical (17 points). Scrip-wise positive contributors were HBL (174 points), BAHL (103 points), PPL (101 points), SYS (92 points), and OGDC (82 points).
Foreign buying was witnessed this week arriving at USD 2.1 million against a net sell of USD 49.3 million last week. Buying was witnessed in Cement (USD 23.9 million) and Technology and Communication (USD 9.2 million). On the domestic front, major selling was reported by Individuals (USD 10.2 million) and Mutual Funds (USD 7.4 million). Average volumes arrived at 1,238 million shares (up by 103 percent WoW) while average value traded settled at USD 178 million (up by 30 percent WoW).
