Pakistan stocks likely to remain bullish next week

KARACHI: The Pakistan stocks had a green outgoing week, while the analysts expect the market to show positivity in the upcoming week attributable to conclusion of talks with the International Monetary Fund (IMF) for the sixth tranche.

“Moreover, support from Saudi Arabia in terms of safe deposits, IMF tranche, and the upcoming Sukuk issue is expected to raise $1 billion alongside the suspension of debt repayment, which will release the pressure of the country’s foreign exchange reserves,” an analyst at Arif Habib Limited said.

“However, current macroeconomic concerns such as rising imports and higher CPI [Consumer Price Index] inflation could keep the market range-bound.”

With a gain of 606 points during the week ended October 29, 2021, the benchmark KSE-100 Index closed on an optimistic note at 46,185 points, up 1.3 per cent, amid inflows from Saudi Arabia, which ended the rupee’s free-fall, dealers said.

The traded volume on the bourse averaged at 202 million shares/day (down 33 per cent), while the average value of traded shares declined 37 per cent to $40 million.

“The overall sentiment was backed by a number of positive news. Major trigger being the commitment by Saudi Arabia to provide a support package of $4.2 billion to Pakistan, of which $3 billion are to be deposited in the State Bank of Pakistan and the remaining $1.2 billion are to be used to finance oil derivatives throughout the year,” Muhammad Waqas at JS Global Capital said.

“[The] Pakistan rupee also appreciated to Rs172.3 against the dollar on the last day of the week; following this news after dropping to its lowest level at 175 in the interbank market on Tuesday. The notification of the appointment of DG ISI was another positive development during the week.”

The engineering sector posted a green week, as the companies announced financial results, which were higher than street consensus, owing to inventory gains coupled with the industry’s ability to pass on the impact of rising raw material prices to the end consumers.

The cement sector also performed well, after it stayed under pressure for the last several weeks, owing to drop in coal prices due to active measures taken by the Chinese government.

The market ended the month by gaining 2.86 per cent, or 1,285 points, to close above the psychological barrier of 46k. However, all share average traded volume remained relatively lower to stand at 276 million shares/day during October.

During the month, the market activities were possessed by the major news inflows, including Pandora Papers in which a massive trove of private financial records was named, uncertain civil-military disturbed relationships, and the IMF allowed Pakistan to fully utilise $2.78 billion for meeting the budgetary requirements.

“Going forward, we expect the market to witness mixed activities; hence, we recommend our investors to book profits in the upcoming month,” an analyst at Pearl Securities.