Weekly Review: Market to materialize GIDC judgment

Weekly Review: Market to materialize GIDC judgment

KARACHI: The stock market likely to materialize decision of the apex court related to Gas Infrastructure Development Cess (GIDC) in coming week.

Analysts at Arif Habib Limited said that although profit taking at the index was due, materialization of certain decisions recently (GIDC judgment and MOUs signed with IPPs) exacerbated the market performance.

With that being said, Pakistan continues to fare better amongst regional and world markets on the COVID-19 front while positive economic developments such as augmenting remittances, growing FX reserves, stable currency, and revival in cyclical demand (Cement, Steel and Automobile) also paints a positive picture for the country.

The benchmark KSE-100 index of Pakistan Stock Exchange is currently trading at a PER of 7.1x (2021) compared to Asia Pac regional average of 14.0x and while offering DY of ~6.3 percent versus ~2.7 percent offered by the region.

Pressure was witnessed at the index this week, marking the end of a rally that spanned over 8 consecutive weeks.

To recall, trading commenced on a negative note given possible curtailment of returns of Independent Power Producers (IPPs) by the incumbent government, under MOUs signed over the weekend.

Whereas negative bearings from the GIDC judgment of the Supreme Court on industries (Fertilizer and Cement scrips in particular) from end of last week rolled over in the outgoing week.

On the flip side, Oil Marketing Companies (OMCs) rallied on the back of expected clearance of the circular debt position. With that said, the equity bourse closed at 39,622 (down by 669 points / 1.7 percent WoW).

Sector-wise positive contributions came from i) Oil & Gas Marketing Companies (39 points), ii) Pharmaceuticals (22 points), iii) Transport (9 points), iv) Paper & Board (5 points), and v) Vanaspati & Allied Industries (3 points). Whereas negative contributions came from Power Generation (218 points) and Fertilizer (165 points). Scrip-wise positive contributions were led by POL (33 points), FFC (32 points), SNGP (30 points), ABL (15 points), and SSGC (14 points).

Foreign selling this week clocking-in at USD 4.0 million compared to a net buy of USD 8.7 million last week. Selling was witnessed in Banks (USD 3.2 million) and Cement (USD 2.9 million). On the domestic front, major buying was reported by Insurance Companies (USD 7.9 million and Individuals (USD 7.3 million). Average volumes settled at 441 million shares (down by a 24 percent WoW) while average value traded clocked-in at USD 107 million (down by 15 percent WoW).