Weekly Review: market to stay range bound on inflation concerns

Weekly Review: market to stay range bound on inflation concerns

KARACHI: Stock market likely to stay range bound during the next week owing to rising inflation concerns and rupee depreciation.

Analysts at Arif Habib Limited said that the market to remain range bound in the upcoming week amid concerns over Pak Rupee depreciation and inflation.

That said, valuations across the board particularly in blue-chips have reached attractive levels.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.1x (2023) compared to Asia Pac regional average of 12.7x while offering a dividend yield of 9.8 per cent versus 2.7 per cent offered by the region.

The market commenced on a negative note this week on account of concerns of inflation and GDP growth post flood crisis in the country, since government estimates the flood losses to be around $15 billion-$20 billion.

Despite disbursement of IMF loan of $1.17 billion last week (taking the SBP reserves to $8.8 billion), the Pak Rupee continued to weaken against greenback to settle at PKR 228.18 (down by PKR 9.2|4 per cent WoW).

Moreover, the cement sector dispatches in August 2022 witnessed a decline of 24 per cent YoY which further dampened the investor sentiment.

Furthermore, urea and DAP sales witnessed a massive fall of 16 per cent and 87 per cent YoY, respectively due to floods. Hence the market remained lackluster. The market closed at 41,948 points, losing 361 points (down by 0.9 per cent) WoW.

Sector-wise negative contributions came from i) Fertilizer (78 points), ii) Commercial Banks (77 points), iii) Power Generation & Distribution (54 points), iv) Food & Personal Care Products (45 points) and v) Oil & Gas Exploration Companies (40 points).

Whereas, sectors which contributed positively were i) Technology & Communication (14 points), and ii) Oil & Gas Marketing Companies (11 points). Scrip-wise negative contributors were ENGRO (57 points), HUBC (51 points), HBL (44 points), EFERT (40 points) and SYS (30 points).

Meanwhile, scrip-wise positive contribution came from TRG (47 points), CHCC (24 points), POL (19 points), DAWH (15 points) and LOTCHEM (12 points).

Foreigners selling continued this week, clocking in at $2.82 million compared to a net sell of $0.74 million last week. Major selling was witnessed in Technology ($1.4 million) and Cement ($0.6 million).

On the local front, buying was reported by Companies ($3.2 million) followed by Banks/DFIs ($2.6 million). Average volumes clocked in at 139 million shares (down by 35 per cent WoW) while average value traded settled at $21 million (down by 34 per cent WoW).