Pakistan stocks to remain volatile next week ahead of results season

KARACHI: Having witnessed a flattish outgoing week, the Pakistan stocks are expected to perform well in FY22 on account of robust earnings growth forecast for cement, steel and allied sectors, amid strong cyclical demand driven by the historic high Public Sector Development Plan (PSDP) allocations and the focus on Naya Pakistan Housing Scheme.

An analyst at Arif Habib Limited said: “[The] stocks should perform on [the] expectation of an auto and refinery policies, downwards sticky oil prices supporting the exploration and production (E&P) sector, and commencement of the monetary tightening, which should once again garner interest in commercial banks.”

The Pakistan Stock Exchange KSE-100 shares index gained 0.17 per cent, or 82.82 points, to close the week ended July 2, 2021 at 47,686.18 points. The KSE-30 shares index gained 0.07 per cent, or 13.21 points, to end at 19,100.47 points.

Ali Zaidi at JS Global Capital said investors’ participation declined, as the average daily volumes dipped 10 per cent to 622 million shares/day, while the value of the traded securities averaged at $107 million/day, down 4 per cent from the last week.

The market remained range-bound this week with the volatile trading on account of June-end closing and adjustment of portfolios. Moreover, as the debate on the Federal Budget moved towards the final stages in the parliament, some stiffness was witnessed in the political climate. Albeit, the budget was passed with a majority vote. The market also gained momentum on the first day of the new fiscal year.

An analyst at Pearl Securities said the market reacted to the developments such as the US started withdrawing troops from Afghanistan, the current account posted a deficit of 632 million in May 2021, inflation for June 2021 stood at 9.7 per cent, the Federal Board of Revenue (FBR) surpassed FY21 tax collection target, and the National Accountability Bureau (NAB) allowed the Power Division to process independent power producers (IPPs) payments.

Foreign selling continued this week clocking-in at $8.4 million, compared with a net selling of $7.9 million last week. The selling was witnessed in commercial banks ($3.2 million) and other sectors ($1.4 million). On the domestic front, major buying was reported by individuals ($13.6 million) and companies ($13.4 million).

The sector-wise positive contributions came from technology (105 points), pharmaceuticals (68 points), food and personal care (51 points), tobacco (22 points), and the insurance sector contributing 14 points to the index.

The sectors that contributed negatively included commercial banks (46 points), power generation and distribution (44 points), oil and gas exploration companies (39 points), oil and gas marketing companies (36 points) and the refinery shedding 18 points off the index.
Moving forward, the analysts expect the market to remain volatile in the upcoming week ahead of the result season.

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