Weekly Review: market to remain positive on improving macroeconomic position

Weekly Review: market to remain positive on improving macroeconomic position

KARACHI: The stock market likely to stay positive during next week owing to improving macroeconomic position, analysts said.

Analysts at Arif Habib Limited said that market to remain positive on the back of improving macroeconomic position, country witnessing foreign net inflows in T-bills (USD 441 million in FY20TD), agreement between government and traders, and decline in fixed income yields.

Furthermore we expect a successful first quarter review with IMF team that will lead towards disbursement of second tranche of USD 455 million.

However, any mishap between government and opposition protesters could pose downside risks to market performance.

The KSE-100 is currently trading at a PER of 5.9x (2020) compared to Asia Pac regional average of 13.6x while offering a dividend yield of ~9.3 percent versus ~2.6 percent offered by the region.

During the outgoing week, despite political uncertainty, trading commenced on a positive note attributable to Prime Minister Imran Khan deferring axle load policy for a year along with meagre increase in cement prices in the Northern Region (as per PBS).

Both developments stimulated bullish momentum in the cement sector. On the other hand, traders called off their two days strike as government agreed to the demands of traders.

Moreover, significant decline in money market yields and impressive tax collection for the month of Oct’19 (increased by 16 percent YoY to PKR 320bn) improved investors’ sentiments.

As a result, the benchmark KSE-100 index closed above the 34K mark at 34,378 points, increasing by 720 points or 2.14 percent WoW.

Contribution to the upside was led by i) Banking Sector (+189 points) ii) Cement Sector (+187 points), iii) Oil and Gas Marketing (+96 points), iv) Fertilizer (+88 points), and v) Power (+61 points).Scrip wise major gainers were DAWH (+83 points), MCB (+81 points), PSO (+78 points), LUCK (+51 points), and DGKC (+46 points). Whereas, scrip wise major losers were FFC (-42 points), OGDC (-20 points), and NESTLE (-17 points).

Foreign offloaded stocks worth of USD 3.13 million compared to a net buy of USD 2.78 million last week. Major selling was witnessed in E&P (USD 2.06 million) and Textile (USD 1.34 million).

On the local front, buying was reported by Companies (USD 5.00 million) followed by Mutual Funds (USD 2.79 million). That said, average daily volumes for the outgoing week were massively up by 34 percent to 166mn shares likewise value traded increased by 41 percent to USD 36 million.

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