Weekly Review: range-bound activity likely

Weekly Review: range-bound activity likely

KARACHI: The stock market is likely to witness range-bound activity during the next week due to concerns over inflation and the devaluation of the Pak Rupee.

Analysts atArif Habib Limited said that the market to remain range-bound in the upcoming week.

Keeping in view concerns over inflation, devaluation of Pak Rupee against the greenback and current account deficit, investors are expected to have a cautious approach.

Moreover, with the ongoing result season, certain sectors and scrips are expected to stay under limelight.

The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.8x (2021) compared to Asia Pac regional average of 14.5x while offering a dividend yield of 7.8 per cent versus 2.2 per cent offered by the region.

The market commenced on a negative note owing to continuing pressure from the last closing amid concerns over a trade deficit of USD 4.1 billion in August 2021.

Furthermore, depreciation of PKR/USD to PKR 168.02 further dampened the sentiment.

Moreover, the decision of MSCI to reclassify Pakistan to Frontier Market Index from Emerging Market in November 2021 led to foreign selling. Albeit, towards the end of the week the market turned positive since scrips were oversold and trading at attractive valuations.

Furthermore, the surge in remittances by 27 per cent YoY to USD 2.7 billion in August 2021 improved the sentiment. That said, the market closed at 47,198 points, climbing up by 241 points (up by 0.5 per cent) WoW.

Sector-wise positive contributions came from i) Technology & Communication (214 points), ii) Miscellaneous (168 points), iii) Commercial Banks (148 points), iv) Pharmaceuticals (59 points), and v) Food & Personal Care Products (14 points).

Whereas, sectors which contributed negatively were i) Cement (155 points), ii) Oil & Gas Exploration Companies (56 points) and iii) Fertilizer (34 points).

Scrip-wise positive contributors were PSEL (164 points), MEBL (147 points), SYS (115 points), TRG (99 points) and NESTLE (39 points). Meanwhile, scrip-wise negative contribution came from LUCK (103 points), HBL (57 points) and ENGRO (51 points).

Foreign selling continued this week, settling at USD 18.6 million against a net sell of USD 5.9 million last week. Selling was witnessed in Commercial Banks (USD 10.9 million), Cement (USD 6.1 million) and Exploration and Production (USD 0.9 million).

On the domestic front, major buying was reported by Individuals (USD 12.9 million) and Insurance Companies (USD 6.2 million). Average volumes clocked-in at 429 million shares (down by 7 per cent WoW) while average value traded settled at USD 87 million (up by 5 per cent WoW).