Weekly Review: Stocks may return to positive

Weekly Review: Stocks may return to positive

KARACHI: Pakistan stocks likely to trade in positive during the next week as the country fully complied with the conditions of Financial Action Task Force (FATF).

Analysts at Arif Habib Limited hoped that market would return to turn positive as Pakistan is fully compliant on FATF’s action plan and an announcement of status is expected in the upcoming week.

READ MORE: Pakistan stocks plunge by 308 points on profit taking

Moreover, financial aid for flood relief from international financial institutions and friendly countries is expected soon, which should curtail the free fall in Pakistani Rupee (PKR) against the dollar.

The benchmark KSE-100 Index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.1x (2023) compared to Asia Pac regional average of 12.5x while offering a dividend yield of 9.8 per cent versus 2.8 per cent offered by the region.

READ MORE: Stocks remain under pressure on political noise

The market opened on positive note this week given Saudi Fund of $3 billion was rolled over till next year while IMF assured support for flood relief and reconstruction.

However, the momentum could not sustain owed to bleeding foreign reserves of the State Bank of Pakistan (SBP) (falling by $278 million WoW), which led the Pak Rupee to further depreciate against greenback (closing at PKR 239.65 towards end of the week).

In addition to this, the foreign direct investment (FDI) during first two months of the fiscal year 2022/2023 plummeted by 26 per cent YoY.

Furthermore, the LSM output reported a 1.4 per cent YoY| 16.5 per cent MoM fall in July 2022. Meanwhile, the investors opted for value buying amid the expectation of receiving $1.5 billion, $0.5 billion and $0.2 billion from the Asian Development Bank (ADB), Asian Infrastructure Investment Bank, and the Japanese Government, respectively.

READ MORE: Pakistan stocks dip for 4th straight session as PKR fall continues

Moreover, the World Bank is also expected to give flood-related support of $1.7 billion. Alongside this, the current account reduced by 54 per cent YoY in August 2022, which further cushioned the overall decline in the index during the week. The market closed at 40,620 points, shedding 1,059points (down by 2.5 per cent) WoW.

Sector-wise negative contributions came from i) E&P (251 points), ii) Banks (246 points), iii) Cement (123 points), iv) Power (74 points) and v) OMCs (73 points).

Whereas, sectors which contributed positively were i) Tobacco (15 points), and Automobile Parts (2 points). Scrip-wise negative contributors were PPL (117 points), OGDC (84 points), LUCK (83 points), MEBL (66 points) and HMB (51 points).

READ MORE: Pakistan stocks extend losses on PKR free-fall to dollar

Meanwhile, scrip-wise positive contribution came from TRG (21 points), PAKT (15 points), UNITY (8 points), FFC (6 points) and IBFL (4 points).

Foreigners buying continued this week, clocking in at $5.09 million compared to a net buy of $13.8 million last week. Major buying was witnessed in Technology ($6.6 million), E&P ($0.5 million), Cement ($0.5 million) and OGMCs ($0.3 million).

On the local front, selling was reported by Insurance ($3.3 million) followed by Mutual Funds ($2.4 million). Average volumes clocked in at 166 million shares (down by 9 per cent WoW) while average value traded settled at $26 million (down by 13 per cent WoW).

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