Weekly Review: Stock market likely to move positive

Weekly Review: Stock market likely to move positive

KARACHI: The stock market likely to move positive during next week on hope of resumption of IMF program.

Analysts at Arif Habib Limited said that the market to move positive as we get closer to resuming the IMF program and receiving a $1 billion tranche.

Whereas recent bouts of selling at the index has once again opened up valuations; we advise investors to cherry-pick blue chip stocks with a long term focus, they said.

Key short term risks include: regional volatility and the ensuing security concerns, together with PKR depreciation.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.2x (2021) compared to Asia Pac regional average of 14.7x while offering a dividend yield of 8.1 per cent versus 2.2 per cent offered by the region.

The benchmark equity bourse closed in green after four weeks of bleeding. During the early part of the week investors resorted to panic selling amid lack of clarity on continuation of the IMF package as well as delay in the process to appoint a new Director General of the ISI (DG ISI).

Albeit, with Finance Minister assuring that the government would soon address concerns of the global lender and resume the IMF’s EFF, as well as PM’s statement allaying any rumors of a military-political divide, the KSE-100 index posted two swift back to back bull runs. The market closed at 44,821 points, (gaining 344 points / up by 0.8 per cent WoW).

Sector-wise positive contributions came from i) Commercial Banks (393 points), ii) Oil & Gas Exploration Companies (136 points), iii) Fertilizer (123 points), iv) Cement (98 points), and v) Pharmaceuticals (28 points). Whereas, sectors which contributed negatively were i) Technology & Communication (342 points), and ii) Food & Personal Care Products (50 points). Scrip-wise positive contributors were HBL (153 points), PPL (87 points), UBL (67 points), LUCK (59 points) and OGDC (42 points). Meanwhile, scrip-wise negative contribution came from TRG (260 points), SYS (70 points) and PAKT (27 points).

Foreign selling continued this week, clocking-in at USD 13.3 million compared to a net sell of USD 3.7 million last week. Major selling was witnessed in Fertilizer Sectors (USD 12.1 million), Commercial Banks (USD 7.8 million) and Cement (USD 3.11 million). On the local front, buying was reported by Insurance Companies (USD 12.2 million) followed by Mutual Funds (USD 3.4 million). Average volumes clocked-in at 342 million shares (up by 29 per cent WoW) while average value traded settled at USD 71 million (up by 20 per cent WoW).

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