Weekly Review: Positive sentiments may prevail

Weekly Review: Positive sentiments may prevail

KARACHI: Trading activities likely witness positive sentiments during upcoming week as political uncertainty may settle down, analysts said.

Analysts at Arif Habib Limited said that the political noise is expected to settle down as the government is making efforts to mend ties with the coalition partners.

Moreover, rise in international oil prices is expected to fuel interest in E&P’s.

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 12.6x and while offering DY of ~6.6 percent versus ~2.8 percent offered by the region.

The market commenced on a negative note this week following the FY21 budget announcement which once again included highly ambitious revenue targets.

However rise in international oil prices (benefitting E&P) and news regarding breakthrough in discovery of drug for treating COVID-19 patients, improved investor sentiment briefly.

The sentiment was short lived as re-introduction of a “smart lockdown” by sealing off hotspots in cities adversely affected sentiment in the bourse. Moreover fall in large scale manufacturing data by 41.89 percent YoY during April 2020 and Pak Rupee depreciation against USD to PKR 167.40/USD further dented confidence.

The market settled at 33,439 points, shedding 1,172 points (down by 3.4 percent) WoW.

Sector-wise negative contributions came from i) Commercial Banks (293 points), ii) Fertilizer (226 points), iii) Cement (183 points), iv) Oil & Gas Marketing Companies (96 points) and Power Generation & Distribution (91 points). Whereas, sector-wise positive contribution came from i) Pharmaceuticals (9 points) and ii) Textile Spinning (3 points). Scrip-wise negative contributions were led by UBL (94 points), LUCK (92 points), ENGRO (74 points), FFC (68 points) and HUBC (65 points).

Foreign selling continued this week clocking-in at USD 4.8 million compared to a net sell of USD 7.7 million last week. Selling was witnessed in Fertilizer (USD 2.4 million) and Commercial Banks (USD 1.9 million).

On the domestic front, major buying was reported by Individuals (USD 12.3 million) and Broker Proprietary Trading (USD 0.5 million).

Average Volumes settled at 229 million shares (up by 1 percent WoW) while average value traded clocked-in at USD 42 million (down by 16 percent WoW).

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