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Weekly Review: positive sentiment may prevail

KARACHI: Positive sentiments are likely to prevail in the stock market during the next week due to result season is commencing and investors hope healthy earnings.

Analysts at Arif Habib Limited said that market to remain bullish in the coming week.

With the result season commencing from next week, we believe cyclical sectors / scrips will be under the limelight on the back of healthy earnings expectations.

Keeping in view the smart lockdowns in place in hotspot areas and aggressive vaccination drive by the Government, a complete lockdown is unlikely.

With the Eurobonds proceeds helping SBP reserves cross USD 16 billion (highest level since July 2017), the analyst expect the PKR/USD parity to remain strong.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.8x (2021) compared to Asia Pac regional average of 16.4x and while offering DY of 7.1 percent versus 2.6 percent offered by the region.

The market commenced on a negative note this week given 5,000+ cases being reported daily, due to which hotspot areas are again under smart lockdown and business timings have reduced.

Moreover, IMF and World Bank forecasted GDP growth at 1.5 percent and 1.3 percent, respectively in FY21, which are lower than SBP’s projection of 3 percent.

Moreover, news came in regarding extension of the Debt Servicing Suspension Initiative (DSSI) till December 2021 which was welcomed in the local bourse.

Alongside this, expectation of robust quarterly results kept the index in the green. The market closed at 45,186 points, gaining 886 points (up by 2 percent) WoW.

Sector-wise positive contributions came from i) Cement (280 points), ii) Technology & Communication (256 points), iii) Textile Composite (65 points), iv) Engineering (58 points) and v) Power Generation & Distribution (57 points).

Sectors that contributed negatively include i) Commercial Banks (40 points), ii) Auto Assembler (22 points) and iii) Fertilizer (21p points). Scrip-wise positive contributors were TRG (251 points), LUCK (124 points), DGKC (45 points), HUBC (34 points) and NRL (33 points) while negative contributors included FFC (24 points), BAHL (20 points) and INDU (17 points).

Foreign selling continued this week clocking-in at USD 9.5 million compared to a net sell of USD 4.9 million last week. Selling was witnessed in Commercial Banks (USD 4.2 million) and Fertilizer (USD 3.0 million). On the domestic front, major buying was reported by Banks / DFIs (USD 3.2 million and Companies (USD 2.5 million). Average volumes arrived at 410 million shares (up by 9 percent WoW) while average value traded settled at USD 122 million (down by 9 percent WoW).