Pakistan stocks likely to remain positive on expectation of strong results

KARACHI: Pakistan stocks witnessed a lacklustre and range-bound week ended August 13, 2021, while analysts anticipate the market to remain positive next week, given the expectation of strong results in the ongoing season.

“Meanwhile, concerns over the Covid-19 fourth wave may keep the sentiment skittish. Further, the prevailing tensions in Afghanistan with the continuing withdrawal of the US army by the end of this month may exert pressure on the local bourse,” an analyst at Arif Habib Limited said.

The Pakistan Stock Exchange KSE-100 shares index shed 0.67 per cent, or 320.14 points, to close the week at 47,169.84 points. The KSE-30 shares index shed 0.58 per cent, or 110.10 points, to close at 18,855.25 points.

On the domestic front, major selling was reported by insurance ($6.60 million) and individuals ($3 million). An average volumes clocked-in at 307 million shares, down 33 per cent, while the average value of the traded securities settled at $73 million, down 14 per cent on a weekly basis.

Foreign buying continued this week, clocking-in at $4 million against the net buying of $3.1 million last week. The buying was witnessed in technology ($4.2 million), banks ($0.9 million) and fertilisers ($0.3 million).

The market commenced on a negative note given the mounting concerns over the current account. Moreover, the recent depreciation of the rupee against the dollar kept the momentum weak. During the week, the market bounced back and cushioned the dip, amid robust financial results of some scrips, massive incentives approved by the federal government for technology and the telecom sector, robust remittances ($2.7 billion in July 2021 and 114 per cent surge in the automobile sales in July 2021.

The major news flow during the week included easing of the lockdown, despite higher positive ratio, delay in the refinery policy, IMF and the World Bank exerting pressure for hike in the power tariff and mixed corporate results announcements.

Amreen Soorani at JS Global Capital said that Finance Minister Shaukat Tarin announced that the IMF would disburse $2.77 billion by August 23, 2021 to Pakistan.

“While the latest data reports total foreign exchange reserves at $24.64 billion, the receipt of these funds would further boost the country’s forex reserves. The government also announced the invitation of bids for the cellular spectrum auction that amounts to $832 million at base price.”

An analyst at Pearl Securities said the market activities remained dull throughout the week with no positive trigger in sight.

“Going forward, we anticipate the market to remain range-bound with dull activities ahead of the two holidays for Ashura; hence, we recommend investors to continue with the “Sell on Strength” strategy in the upcoming week.”

The KSE-100 index is currently trading at a PER of 6.6x (2021), compared to the Asia-Pacific regional average of 16.0x, while offering a dividend yield of 6.6 per cent versus 2.4 per cent offered by the region.