Weekly Review: stock market likely to move positively

Weekly Review: stock market likely to move positively

KARACHI: The stock market is expected to move positively during the next week as scrips are trading at attractive valuations.

Analysts at Arif Habib Limited said that IMF Review is starting from October 4, 2021, which if successful may provide much-needed respite to the ailing investment sentiment.

Moreover, the recent statement of the US Secretary of State recognizing Pakistan’s crucial part in making talks with the Taliban successful will ease off investor concerns.

The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.3x (2021) compared to Asia Pac regional average of 14.3x while offering a dividend yield of 8.2 per cent versus 2.3 per cent offered by the region.

The market commenced on a negative note this week due to high global commodity prices such as all time high coal prices of USD 200.50/ton tagged with Arab Light Price reaching a 3-Yr high of PKR 80.20/bbl.

The sentiment was further fueled by continuous depreciation of PKR against USD, climbing up to the highest ever level of PKR 170.66, raising economic concerns.

Moreover, the market experienced a meltdown after a month-old republican draft proposing to investigate Pakistan’s involvement in Taliban’s takeover in Afghanistan resurfaced.

Meanwhile, investor sentiment turned positive on the back of expectation of re-entry in IMF program along with the government announcing measures to slow down imports, which cushioned the dip. The market closed at 44,872 points, shedding 202 points (down by 0.4 per cent) WoW.

Sector-wise negative contributions came from i) Commercial Banks (117 points), ii) Pharmaceuticals (47 points), iii) Fertilizers (32 points), iv) Cement (25 points), and v) Insurance (21 points). Whereas, sectors which contributed positively were i) Oil & Gas Exploration Companies (35 points), and ii) Oil & Gas Marketing Companies (20 points). Scrip-wise negative contributors were MCB (84 points), HBL (84 points), FFC (42 points), LUCK (33 points) and UBL (30 points). Meanwhile, scrip-wise positive contribution came from MEBL (55 points), POL (47 points) and KEL (24 points).

Foreign selling was witnessed this week, clocking-in at USD 21.9 million compared to a net buy of USD 6.7 million last week. Major selling was witnessed in Commercial Banks (USD 13.5 million), and Exploration and Production (USD 4.3 million). On the local front, buying was reported by Commercial Banks (USD 10.1 million) followed by Insurance Companies (USD 8.1 million). Average volumes clocked-in at 355 million shares (down by 8 per cent WoW) while average value traded settled at USD 76 million (up by 3 per cent WoW).