Pakistan bourse to remain positive next week

KARACHI: The KSE-100 Index closed at 47,296 points, climbing up by 1,111 points, or 2.4 per cent, during the week ended November 5, 2021, and the analysts expect the market to remain positive in the upcoming week.

“With [the] IMF [International Monetary Fund] and Pakistan expected to reach [an] agreement soon, the investors’ sentiment is anticipated to be upbeat, whereas, [the] current macroeconomic concerns such as higher inflationary reading due to jump in [the] petroleum prices could keep the market range-bound,” an analyst at Arif Habib Limited said.

The market commenced on a positive note this week since the government was able to convince the banned outfit TLP to call off its protest in the Capital. Moreover, rebound in the rupee value against the greenback, substantial reduction in the international coal prices and narrowing of trade deficit on a month-on-month basis by 10 per cent further strengthened the sentiment.

Prime Minister Imran Khan’s announcement of Rs120 billion subsidy package on essential food items further kept the momentum robust. Though profit-taking was witnessed briefly in a few scrips but the sentiment remained unchanged.

Foreign selling continued this week, clocking-in at $11.2 million, compared with a net selling of $2.7 million last week. Major selling was witnessed in commercial banks (5.6 million) and fertiliser ($1.4 million). Investors’ participation also witnessed a return, recording 113 per cent growth to a low base last week.

The refinery sector surged 15.9 per cent and the technology sector up 12.6 per cent were among the key gainers, as they rebounded after sluggish performance in the previous weeks, while steel and engineering, which went up 4.7 per cent, was also among the top performers.

After a consistent rally, the banking sector, up 1 per cent and the cement sector up 0.9 per cent were among the underperformers this week.

The week also saw appreciating rupee against the dollar, closing at 39-day high of Rs169.90, while the three-month T-bill cutoff yields rose 25bps to 8.5 per cent (125bps above the policy rate) in the latest auction.

On the economic front, the Federal Board of Revenue’s (FBR) collection for October 2021 continued the robust growth trajectory with 33 per cent growth. Moreover, the Consumer Price Index (CPI) inflation for the month was registered at 9.2 per cent.

“Going forward, we expect the market to move both ways; hence, we recommend investors to adopt a buy on dip strategy in the upcoming week,” an analyst at Pearl Securities said.