Pakistan’s equity market may remain bullish next week

Javed MirzaWeb Editor

17th Jul, 2021. 03:58 pm

KARACHI: The Pakistan stocks saw some gains in the outgoing week, despite a continued rise in the Covid cases, and the market is expected to continue the same momentum next week.

“We highlight cyclical sectors to be in the limelight due to healthy earnings expected in the upcoming results season. That said, the Covid’s fourth wave is a concern, which may keep the sentiment jittery,” an analyst at Arif Habib Limited said.

The Pakistan Stock Exchange KSE-100 shares index gained 0.56 per cent, or 270.88 points, to close the week ended July 16, 2021 at 47,834.33 points. The KSE-30 shares index gained 0.52 per cent, or 99.48 points, to close at 19,210.35 points.

The average daily traded volumes increased 3.9 per cent to 467 million shares/day, while the average value of traded securities declined 9.7 per cent to $96 million/day.

Ali Zaidi at JS Global Capital said that the dark clouds continued to loom on the horizon in the form of bullish international oil prices.

“Some of these clouds had already started to rain down, as is visible in the latest petrol prices, which have touched an all-time high, despite zero levy and reduced general sales tax. Further, the stark increase in [the] Covid-19 infections was another dampener, particularly considering the emergence of the Delta variant in Pakistan.”

The outgoing week also saw the release of the power generation data, which posted the highest-ever generation of 130,223GW. Other news included receipt of $1 billion from the issuance of the Eurobond, helping the reserves cross the highest level-ever of more than $25 billion. The remittances also clocked in at the highest level of $29.4 billion.

The sector-wise positive contributions came from the commercial banks (82 points), technology and communication (75 points), cement (46 points), textile composite (36 points), and investment banks/companies contributed 36 points to the index.

Meanwhile, the sectors that contributed negatively included fertiliser (36 points), power generation and distribution (17 points), pharmaceuticals (13 points), oil and gas exploration companies (12 points) and automobile parts and accessories eroded 7 points off the index.

Foreign buying was witnessed this week, settling at $4.6 million against the net selling of $5.2 million last week. Buying was witnessed in cements ($1.32 million), exploration and production ($1.3 million) and technology and communication ($1.30 million).

On the domestic front, the major selling was reported by individuals ($9.98 million) and broker proprietary trading ($6.32 million).

On the regional front, the conflict in Afghanistan continues to be the major concern. However, some positive developments did surface on the economic front such as a 14.57 per cent growth in the large-scale manufacturing during the 11 months of FY21 and a record high workers’ remittances during the same period.

“Moving forward, we expect the market to remain volatile in the upcoming week ahead of the Eid holidays; hence, we recommend our investors to adopt a selling on strength strategy,” an analyst at Pearl Securities said.



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