Weekly Review: market to see improved activities after Eid

Weekly Review: market to see improved activities after Eid

KARACHI: Stock market may witness enhanced activities after Eid ul Fitr, analysts said.

The analysts at Arif Habib Limited said that provisional estimates of the National Accounts Committee (NAC) suggest slowdown in GDP at a negative 0.4 percent during the ongoing year.

Although investors struggle to find silver linings at present, expectations of a rebound next year (IMF forecasts GDP growth at 2 percent in FY21) marks the upcoming Federal Budget a key event for the market.

“We believe commencement of economic activity amid ease in lockdown as well growth boosting budgetary measures could potentially reinvigorate the market momentum post Eid break,” the analysts said.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.1x (2020) compared to Asia Pac regional average of 11.4x while offering a dividend yield of around 8.3 percent versus around 3.1 percent offered by the region.

Chronic economic concerns given wildfire-like spread of COVID-19 cases, weak external account data (CAD at USD 572 million in April 2020; exports / remittances down by 23.5 percent / 5.5 percent MoM) as well as profit-taking near the key 34,000 index level, overshadowed the SBP’s monetary response to Corona induced decline in economic activity (another 100bps cut in policy rate to 8 percent).

Moreover, market participants appeared weary of building long positions prior to the Eid break and hence, the benchmark equity bourse closed at 33,837 points (down by 172 points / 0.5 percent WoW).

Sector-wise negative contributions came from i) Commercial Banks (162 points) as Moody’s placed five Pakistani banks on review for downgrade and adverse impact of rate cut on NIMs, ii) Fertilizer (114 points), and iii) Cement (95 points).

Scrip-wise negative contributions were led by ENGRO (52 points), FFC (43 points), and MCB (36 points). Whereas top gainers were: i) Oil & gas exploration companies (120 points) and Food and personal care products (32 points).

Foreign offloading during the week arrived at USD 8.77 million compared to a net sell of USD 10.91 million last week.

Selling was witnessed in Oil & Gas Marketing Companies (USD 2.36 million), Banks (USD 2.11 million) and Fertilizer (USD 1.69 million).

On the domestic front, Individual accumulated stocks worth USD 11.37 million, while buying by Insurance companies arrived at USD 4.9 million.

Average volumes settled at 205.5 million shares (down by 6 percent WoW) while average value traded clocked-in at USD 47.5 million (up by 18 percent WoW).