Pakistan stocks expected to pick up pace amid results season

KARACHI: After a lacklustre and range-bound outgoing week, analysts expect the stock market to pick up pace next week.

“The results season is about to commence and we think that cyclical sectors can once again attract the limelight on the back of robust economic activity,” an analyst at Arif Habib Limited said.

Moreover, oil prices have continued to remain downwards sticky with no outcome on the oil output increase, which could spur buying in E&P scrips. However, fears over the fourth wave of the Covid-19 pandemic could keep the sentiments under check.

The Pakistan Stock Exchange KSE-100 shares index shed 0.25 per cent, or 122.73 points, to close the week ended July 9, 2021 at 47,563.45 points. The KSE-30 shares index gained 0.05 per cent, or 10.43 points, to close at 19,110.87 points.

The overall activity on the bourse dampened during the week, as average traded volumes declined 22 per cent to 486 million shares/day, while the average value of traded securities settled at $107 million, down 1 per cent.

Foreign selling continued during the outgoing week, clocking-in at $5.2 million, compared with the net selling of $8.4 million last week.

On the news front, the auto manufacturers slashed car prices across-the-board and announced to pass on the impact of the reduction in the federal excise duty to the customers. In the light of the rising international commodity prices, the local players increased the prices of re-bars. Similarly, prices of DAP were also increased domestically to pass on the international surge in prices.

Moreover, uncertainty over how the geopolitical scenario pans out with regard to the US exit from Afghanistan, and Pakistan’s crucial role in this, has also kept the sentiments jittery.

Ali Zaidi at JS Global Capital said: “[The] foreign exchange reserves with the central bank jumped $1.1 billion to a multiyear high of $17.2 billion, reportedly due to flows from the World Bank and China. This does not reflect the $1 billion Eurobond that was floated this week.”

Further, the government raised Rs146 billion in the latest Pakistan Investment Bond (PIB) auction where a major chunk was raised in the three-year tenor. With regard to the coronavirus, Federal Minister for Planning, Development and Special Initiatives Asad Umar warned that clear signs of the fourth wave had already begun to show with the spread of the new variants of the virus.

In other major news; talks with the International Monetary Fund (IMF) are going smoothly as per the central bank chief, Pakistan’s power production hits record high of 24,284MW, and Opec+ abandons policy meeting after the clash between Saudi Arabia and the United Arab Emirates.

The KSE-100 is currently trading at a PER of 6.8x (2021), compared with the Asia Pacific regional average of 16.2x, while offering a dividend yield of 6.9 per cent versus 2.3 per cent offered by the region.

Also Read

Pakistan stocks breach psychological barrier of 48,000 points on brisk buying

KARACHI: The Pakistan Stock Exchange (PSX) witnessed a bull run, as oil...