KARACHI: The third wave of coronavirus with high number of cases is remained a key risk for the stock market during next week, analysts said.
Analysts at Arif Habib Limited said that while the NCOC has advised stricter restrictions and shorter work hours, a complete lockdown on a national level has been ruled out.
This will be a sigh of relief for the business community. Albeit the third wave of the novel coronavirus (more lethal than the last two) remained a key risk for the market.
The analysts said that the strong result season appears to be a solid indicator of the economic and corporate recovery.
The benchmark KSE-100 of Pakistan Stock Exchange is currently trading at a PER of 6.7x (2021) compared to Asia Pac regional average of 16.1x while offering a dividend yield of ~7.2 percent versus ~2.6 percent offered by the region.
With a perturbing political situation building up from last weekend (protests and sit-ins by TLP across the country and a series of failed negotiations with the government), the domestic equity bourse displayed adverse momentum at the beginning of the week.
Although slight relief appeared in the form of robust result announcements, it remained short-lived as growing prevalence of COVID-19 infection globally (India made a new high in reported cases; over 332,000 in a single day) and rising local cases, squashed any signs of recovery at the market. While expectations of a wider lockdown to be implemented by the NCOC, also kept investors wary. The KSE-100 index closed at 44,707 points, down by 1.3 percent / 599 points WoW.
Contribution to the downside was led by i) Oil and Gas Exploration Companies (210 points), ii) Cement (78 points), iii) Power generation (93 points), iv) Chemical (79 points), and v) Oil and Gas Marketing Companies (77 points). Whereas sectors that contributed positively include i) Commercial Banks (160 points) amid strong result outcomes, ii) Technology (58 points), and iii) Fertilizer (28 points). Scrip-wise major losers were OGDC (96 points), HUBC (76 points), and PPL (56 points). While top positive contributors were TRG (118 points), ENGRO (77 points), and HBL (60 points).
Foreigners accumulated stocks worth of USD 7.3 million compared to a net sell of USD 0.9 million last week. Major buying was witnessed in Technology and Communication (USD 4.80 million) and Commercial Banks (USD 2.42 million). On the local front, selling was reported by Mutual Fund (USD 7.73 million) followed by Companies (USD 5.35 million). That said, average daily volumes and traded value for the outgoing week were down by 10 percent and 3 percent to 333 million shares and USD 97 million, respectively.
