Weekly Review: MPS to move stock market

KARACHI: The State Bank of Pakistan (SBP) is scheduled to issue monetary policy statement (MPS) on September 21, 2020 which will move the stock market during the next week.

Analysts at Arif Habib Limited said that with SBP’s Monetary Policy Committee (MPC) expected to maintain a status quo stance, they expect the monetary policy announcement on Monday (September 21, 2020) to be a non-event for the market.

In addition, expectations of PM Khan delivering another fiery speech at the UN General Assembly on September 25, 2020, fortifying Pakistan on the global map, should also aid sentiments.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.7x (2021) compared to Asia Pac regional average of 14.0x and while offering DY of ~5.9 percent versus ~2.7 percent offered by the region.

Uncertainty over approval of FATF bills in the Parliament together with pressure on International oil prices during earlier part of the week perturbed sentiment at the domestic equity bourse.

In addition, investors adopted a hibernation policy prior to next week’s Monetary Policy meeting (marking end of a 3 month hiatus by the SBP), which kept the volumes dry. Thus, the market closed down by 26 points WoW / -0.1 percent WoW to 42,505 level.

Sector-wise negative contributions came from i) Insurance (47 points), ii) Commercial banks (38 points), iii) Power generation and distribution (37 points), iv) Tobacco (28 points), and v) Textile composite (25 points). Whereas positive sectoral contributions were led by i) E&P (61 points), ii) Chemical (25 points), and iii) Food and personal care products (21 points). Scrip-wise main laggards were: TRG (27 points), PPL (26 points), PAKT (25 points), KAPCO (25 points) and HBL (24 points).

Foreigners offloaded stocks worth of USD 1.69 million compared to a net sell of USD 4.40 million last week. Major selling was witnessed in Commercial Banks (USD 2.41 million) and Food and personal Care Products (USD 2.32 million). On the local front, buying was reported by Insurance Companies (USD 10.56 million) followed by Mutual Funds (USD 3.56 million). That said, Average volumes settled at 537 million shares (down by a 28 percent WoW). While average value traded clocked-in at USD 93 million (depicting a decline of by 35 percent WoW).

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