Analysts foresee favourable outlook for Pakistan bourse
KARACHI: Pakistan bourse tumbled 0.87 per cent during the week ended October 8, 2021; however, analysts maintain a favourable outlook for the local equities given the successful conclusion of the International Monetary Fund (IMF) negotiations, attractive market valuations, and the upcoming quarterly results season.
“[The] market direction is likely to be determined by [the] upcoming results season, geopolitical situation and most importantly, [the] IMF review where formal talks are expected to take place next week,” an analyst at AKD Securities said.
The government appears to be formulating strict measures to enhance the tax base. Moreover, gas and electricity tariff hikes are on the cards, as well.
“The index may remain in pressure in the near-term due to the consistent devaluation of [the] rupee against [the] dollar, continuous surge in [the] global commodity prices, and uncertainty on the geopolitical front,” an analyst at BMA Capital said.
The Pakistan Stock Exchange KSE-100 shares index shed 0.87 per cent, or 394.46 points, to close at 44,477.24 points. The KSE-30 shares index shed 0.47 per cent, or 83.36 points, to close at 17,524.8 points.
Participation during the week remained dull with an average daily traded volume standing at 265 million shares, down 25 per cent against 355 million shares witnessed during the previous week, whereas the value of traded securities averaged at $60 million, down 21 per cent.
Flow-wise, individuals remained the major buyers with net buying of $7.13 million; followed by mutual funds with the net buying of $3.61 million, while companies stood on the other side with the net selling of 16.05 million; followed by foreigners offloading a net of $3.7 million.
Trading activity during the outgoing week remained jittery, amid macroeconomic concerns, including downslide in the rupee to an all-time low, weak trade performance, as imports continued to surge, continuous increase in the international coal prices putting pressure on cement scrips, and an all-time high international commodity index, causing panic among the investors.
“However, the trading activity picked up pace on the back of slight improvement in the rupee/dollar parity given curbs on the dollar outflows, and a dip in the international coal prices, which rejuvenated the investors’ interest in the cement sector,” an analyst at Arif Habib Limited said.
“In addition to the Pandora Papers, an alarming import bill, higher-than-expected inflation reading and rising global commodity prices, concerns over the upcoming IMF review continued to decrease investors’ activity,” Amreen Soorani at JS Global Capital said.
Analysts believe the market participants should look to invest in the banks where the possibility of further interest rate hikes could bring the sector into the limelight, while techs and textiles (on currency depreciation) and cements (coal prices started to ease off) are other sectors of interest.
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