Weekly Review: stock market likely to stay stable

Weekly Review: stock market likely to stay stable

KARACHI: The stock market likely to stay during next week owing to transfer second IMF tranche and stable rupee value, analysts said.

Analysts at Arif Habib Limitd said that the market to be positive in the coming week.

With SBP reserves climbing up and stable Pak Rupee/USD parity the investors’ sentiment should remain positive.

Furthermore, Pakistan has received second tranche of $452 million of IMF loan. Moreover, new portfolio allocations are expected from the start of the New Year, which can improve the market sentiment and flows.

The KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.2x (2020) compared to Asia Pac regional average of 13.7x and while offering DY of ~6.6 percent versus ~2.5 percent offered by the region.

The market commenced on a negative note this week, losing 900 points during the intraday trading. Tensions on Indo-Pak border kept the momentum suppressed during the week. Bulls took over after IMF expressed contentment in first quarterly review regarding improvement in external side in the light of market determined exchange and steady improvement on the fiscal front.

Furthermore, IMF allowed Pakistan to change performance standards for issuance of sovereign guarantees. Albeit market closed at 40,848 points, gaining 16 points (up by 0.04 percent WoW) as 2019 approached its end.

Sector-wise positive contributions came from i) Commercial Banks (43 points), ii) Power Generation & Distribution (42 points), iii) Oil & Gas Marketing Companies (19 points), iv) Engineering (15 points), and v) Cement (13 points).

Whereas, negative sector-wise contribution came from i) Insurance (31 points), Tobacco (31), Automobile Parts & Accessories (21 points) and Fertilizers (17 points). Scrip-wise positive contributions were led by ENGRO (70 points), HUBC (55 points), OGDC (39 points), PSO (20 points) and UBL (18 points).

Foreign selling was witnessed this week clocking-in at USD 2.9 million compared to a net buy of USD 3.1 million last week. Selling was witnessed in Exploration & Production (USD 1.5 million) and Commercial Banks (USD 0.7 million).

On the domestic front, major buying was reported by Insurance Companies (USD 10.5 million) and Mutual Funds (USD 7.2 million). Average Volumes settled at 230 million shares (down by 23 percent WoW) while average value traded clocked-in at USD 54 million (down by 35 percent WoW).

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