Pakistan Stock Exchange

Weekly Review: stock market to remain positive on budget incentive expectations

Stock & Commodity

KARACHI: The stock market will likely remain positive during the next week with a view of a positive budget for the market, analysts said.

The analysts at Arif Habib Limited however, said that they cannot rule out short term dips in the market due to COVID.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.1x (2021) compared to Asia Pac regional average of 16.6x while offering a dividend yield of ~6.8 percent versus ~2.6 percent offered by the region.

The KSE-100 index marched past the 48,000 level after a 4-year period this month to close at 48,211 points. The market was mainly fueled by expectation of favorable budgetary measures for the capital market, and for economic growth under the budget 2021/2022.

Likewise, tax revenue collection hit a historic high of around PKR 4.143trn during 11MFY21 further fueling the market. Additionally inflation clocked in at 10.87 percent lower than expected.  Oil prices (Arab Light) during the week increased by 2 percent WoW, settling at USD 70.87/bbl, which helped fuel performance of E&P scrips. The market settled at 48,211 points, gaining by 1085 points (up by 2.3 percent) WoW.

Sector-wise positive contributions came from i) Oil & Gas Marketing Companies (125  points) ii) Cement (120  points), iii) Oil & Gas Exploration Companies (115  points), iv) Power Generation & Distribution (82  points) and v) Pharmaceuticals (72  points). Meanwhile, the sectors that contributed negatively include Synthetic & Rayon (2.89  points), Real estate & Investment Trust (1.43  points) and Vanaspati & Allied Industries (0.12). Scrip-wise positive contributors were PSO (56  points), PPL (49  points), KAPCO (44  points), SEARL (43  points) and DGKC (43  points). Scrip-wise negative contributors were BAHL (22  points), MTL (15  points), KEL (10  points), HBL (6  points) and FFC (6  points).

Foreign selling this week clocking-in at USD 0.2 million compared to a net buy of USD 2.1 million last week. Selling was witnessed in Exploration & Production (USD 2.7 million) and Power Generation & Distribution (USD 2.4 million). On the domestic front, major buying was reported by Individuals (USD 11.1 million) and Mutual Funds (USD 4.6 million). Average volumes arrived at 1,122 million shares (down by 9.4 percent WoW) while average value traded settled at USD 192 million (up by 7.9 percent WoW).

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