Pakistan equity market may remain volatile next week

KARACHI: The benchmark stocks lost 1.5 per cent during the week ended July 30, 2021, and analysts predict a volatile week ahead as the Sindh government has imposed a strict lockdown, amid corporate results announcement season, dealers said on Saturday.

An analyst at Arif Habib Limited said with the result season commencing, and cyclical expected to post a robust jump in the earnings on a yearly basis, given a nation-wise lockdown was enforced in the second quarter last year, certain select stocks might come under limelight next week.

“Karachi is set to observe a more stringent lockdown in place next week to contain the highly contagious delta variant of the novel coronavirus, and it appears the market may remain upward sticky in the short-term,” an analyst at Arif Habib Limited said.

An analyst at Pearl Securities recommended for investors to adopt the sell on strength strategy in the upcoming week. “Going forward, we expect the market to remain volatile.”

Maaz Mulla at JS Global Capital gave some buying tips. “Going forward, in the light of the Covid concerns, we recommend investors to adopt a buy on dips strategy in the banking, textile and fertiliser sectors.”

The KSE-100 shares index remained under pressure for most part of the outgoing week, closing in the red in four of the five sessions.

“Key sentiment dampener was the sharp incline in domestic Covid ratio with businesses asked to operate at 50 per cent workforce. Albeit, with no relief on the infection front, the Sindh government announced a complete lockdown in Karachi for the following week, causing the bourse to book further losses. Although investors heaved a sigh of relief during [the] mid-week with the central bank holding its benchmark policy rate at 7 per cent, which translated into buying in cement and steel scrips.”

The Pakistan Stock Exchange KSE-100 shares index shed 1.54 per cent, or 737.78 points, to close at 47,055.29 points. The KSE-30 shares index shed 1.69 per cent, or 324.19 points, to close at 18,837.05 points.

The fertiliser sector outperformed the benchmark index over better-than-expected margins and strong overall expectations, going forward.

Overall, the investors’ participation remained healthy, as average daily volumes went up 28 per cent to 405 million shares/day and the value of traded securities surged 14 per cent to $81 million/day for the outgoing week.

The foreigners offloaded stocks worth $5.4 million, compared with the net selling of $21.02 million last week. The major selling was witnessed in commercial banks ($2.94 million) and all other sectors ($2.56 million).

On the local front, buying was reported by banks ($6.3 million); followed by the mutual funds ($2.43 million).

During the week, the Monetary Policy Committee decided to keep the policy rate unchanged at 7 per cent to facilitate economic growth in line with the general expectations of the market.

Moreover, the International Monetary Fund (IMF) revised upwards Pakistan’s growth forecast to 3.9 per cent for FY21. With regard to the Extended Fund Facility (EFF), discussions are still underway between the government and the IMF on the sixth review of the programme.

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