Weekly Review: positive sentiments to prevail on lockdown easing

Weekly Review: positive sentiments to prevail on lockdown easing

KARACHI: The stock market may be in positive zone during next week as the government prepares to ease off lockdown in the country, analysts at Arif Habib Limited said.

Moreover, loan disbursement from IMF of $1.4 billion next week will also relieve fiscal pressures and set in motion aggressive measures to counter any economic fallout amidst corona.

In addition, with the construction sector resuming operations from April 14, 2020, cement and steel are expected remain in limelight.

Whereas with global demand curtailment owing to corona exceeding oil output cut by various countries, we believe oil prices may remain range-bound.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.8x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of ~8.7 percent versus ~3.1 percent offered by the region.

The KSE-100 index opened up on a positive note on Monday morning, given announcement of a construction package by PM Khan on the last day of the prior week. Albeit, momentum could not sustain and the sentiment quickly turned negative over expectations of economic slowdown by the Asian Development Bank and World Bank followed by increase in new COVID-19 cases (18 percent DoD on Monday).

Bulls returned the following day after crude oil prices went up in anticipation of agreement over significant cut in oil production by OPEC+ followed by possibility of an energy sukuk issuance.

Furthermore, FATF extended Pakistan’s deadline to meet targets till Sep’20, which kept the trajectory positive. The KSE-100 closed at 32,033 points, gaining 411 points (up by 1.3 percent) WoW.

Sector-wise positive contributions came from i) Oil & Gas Exploration Companies (132 points), ii) Cement (78 points), iii) Fertilizer (71 points), iv) Insurance (70 points) and Power Generation & Distribution (37 points).

Meanwhile, sector-wise negative contribution came from i) Automobile Parts & Accessories (20 points), Tobacco (13 points) and Textile Composite (13 points). Scrip-wise positive contributions were led by OGDC (127 points), BAFL (51 points), HUBC (49 points), FFC (42 points) and DGKC (40 points).

Foreign selling continued this week clocking-in at USD 16.2 million compared to a net sell of USD 36.1 million last week. Selling was witnessed in Commercial Banks (USD 5.9 million) and Cement (USD 2.1 million).

On the domestic front, major buying was reported by Individuals (USD 9.4 million) and Insurance Companies (USD 5.0 million). Average Volumes settled at 186 million shares (down by 18 percent WoW) while average value traded clocked-in at USD 42 million (down by 8 percent WoW).