KARACHI: The stock market likely to remain positive during next week on expectation of no change in policy rate in the monetary policy statement schedule to be announced on May 28, 2021.
Analysts at Arif Habib Limited said that the market likely to remain positive in the upcoming week.
With the monetary policy scheduled to be unveiled next week (28th May’21), we foresee the SBP to maintain status-quo on its benchmark policy rate. We believe market performance will be dictated by budgetary expectations while key risk for the medium term remains spike in COVID-19 cases, the analysts said.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.8x (2021) compared to Asia Pac regional average of 15.8x while offering a dividend yield of ~7.2 percent versus ~2.6 percent offered by the region.
After long Eid Holidays, the market commenced on a positive note given ease in lockdown restriction following drop in COVID-19 cases.
Moreover, optimistic sentiment also stemmed from the MSCI Semi Annual Review, where Pakistan’s weight witnessed an increase (0.023 percent from 0.016 percent earlier), in lieu of the LUCK and TRG’s addition to the EM Standard Index and Small Index, respectively.
Meanwhile, favorable budgetary measures for the capital market under the FY22 budget kept the momentum green. Whereas, oil prices (Arab Light) during the week dropped by 4 percent WoW, settling at USD 64.72/bbl. The market settled at 45,915 points, gaining by 740 points (up by 1.6 percent) WoW.
Sector-wise positive contributions came from i) Cements (139 points) ii) Oil & Gas Marketing Companies (102 points), iii) Fertilizers (90 points), iv) Food & Personal Care Products (89 points) and v) Technology & Communication (64 points). Meanwhile, the sectors that contributed negatively include Commercial Bank (32 points) and Power Generation & Distribution (18 points). Scrip-wise positive contributors were TRG (93 points), UNITY (68 points), LUCK (62 points), MARI (57 points) and ENGRO (46 points).
Foreign selling continued this week clocking-in at USD 49.4 million compared to a net buy of USD 1.0 million last week. Selling was witnessed in All other sector (USD 43.4 million) and E&P (USD 7.8 million). On the domestic front, major buying was reported by Individuals (USD 37.2 million and Companies (USD 18.1 million). Average volumes arrived at 609 million shares (up by 153 percent WoW) while average value traded settled at USD 137 million (up by 84 percent WoW).
