Weekly Review: stocks to make gain on expected FATF positive outcome

Weekly Review: stocks to make gain on expected FATF positive outcome

KARACHI: The stock market is likely to regain positive momentum next week on the expected exit of Pakistan from the grey list of Financial Action Task Force (FATF).

Analysts at Arif Habib Limited said that the market to regain positive momentum in the coming week. With FATF’s Plenary Session to be held on 21st June 2021, the index is expected to bounce back as an exit from the grey list seems imminent.

Furthermore, on COVID-19 front, infection ratio has dropped to 1.91 percent (which is an 8 month low).

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.9x (2021) compared to Asia Pac regional average of 16.5x while offering a dividend yield of ~6.8 percent versus ~2.6 percent offered by the region.

The market commenced on a positive note this week given a set of relief measures announced in the Budget such as a decline in capital gain tax to 12.5 percent from 15 percent tagged with positive measures for refineries, auto sector and information technology sector.

Moreover, the government increased dividend expectations from OGDC and PPL (Rs17.50/share and Rs8.25/share, respectively) which kept these scrips in the limelight.

However, the market turned red later in the week as the investors resorted to profit-taking. Furthermore, a deadlock between the IMF and the government persisted which further stressed sentiment. Albeit, the market settled at 48,239 points, shedding 66 points (down by 0.14 percent) WoW.

Sector-wise negative contributions came from i) Commercial Banks (176  points) ii) Fertilizer (88  points), iii) Food & Personal Care Products (52  points), iv) Automobile Assembler (34  points) and v) Miscellaneous (31  points). Whereas, the sectors that contributed positively include Oil & Gas Exploration Companies (156  points), Cement (74  points), Power Generation & Distribution (31  points), Engineering (30  points) and Tobacco (25  points). Scrip-wise negative contributors were HBL (88  points), UNITY (56  points), TRG (47  points), UBL (40  points) and EFERT (34  points). Scrip-wise positive contributors were OGDC (99  points), POL (64  points), HUBC (46  points), LUCK (36  points) and SYS (28  points).

Foreign selling continued this week clocking-in at USD 6.8 million compared to a net buy of USD 7.5 million last week. Selling was witnessed in Commercial Banks (USD 2.5 million) and Technology (USD 2.5 million). On the domestic front, major buying was reported by Individuals (USD 21.4 million and Mutual Funds (USD 10.9 million). Average volumes arrived at 1,049 million shares (down by 3 percent WoW) while average value traded settled at USD 170 million (up by 6 percent WoW).

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