KARACHI: The Pakistan Stock Exchange (PSX) witnessed tepid trading in the outgoing week as an uptrend in the new virus cases kept market participants mostly on the sidelines. Resultantly, the KSE-100 index gained 60 points or 0.13% to end the week at 45,078 points.
The market commenced on a negative note this week, given concerns over expectations of a hike in the policy rate.
However, the bourse turned green after the Monetary Policy Committee (MPC) kept the policy rate unchanged at 9.75% for the next two months.
Unfortunately, the momentum remained in check given the hefty surge in international oil prices, climbing up to a seven-year high which raised concerns over inflation.
Rising COVID-19 cases and postponement of the International Monetary Fund (IMF) sixth review kept the market range bound.
Meanwhile, reduction in cut-off yields of the government’s market Treasury bills by 68 basis points provided resistance against bears.
The market welcomed the passing of State Bank (Amendment) Bill 2021 by the Senate since it is now most likely that disbursement of $1 billion will be approved by the Executive Board of IMF in the next scheduled meeting on February 2.
Other major developments during the week were: the government decided to launch Ehsaas petrol card for bikers, State Life signed MoU with UBL, forex reserves declined by $867 million, Bank of Punjab decided to raise Rs13 billion debt financing for Lucky Electric, Pakistan Refinery set to start exporting furnace oil next month and Nepra cleared phasing out of Rs20 billion power subsidies.
Meanwhile, foreign selling was witnessed this week, clocking in at $4 million against a net sell of $2.09 million recorded last week. Selling was witnessed in technology and communication ($2.4 million), and cement ($1.3 million).
On the domestic front, major buying was reported by companies ($19.5 million), followed by mutual funds ($4.8 million).
During the week under review, average volumes clocked in at 187 million shares (down by 7% week-on-week), while average value traded settled at $38 million (down by 9% week-on-week).
Sector-wise positive contributions came from cement (+55 points), power generation and distribution (+45 points), food and personal care products (+30 points), fertiliser (+26 points), and commercial banks (+24 points). On the flip side, negative contributions came from technology and communication (-52 points), oil and gas exploration companies (-50 points) and automobile assemblers (-14 points).
A report from Arif Habib Limited predicted: “With Pakistan and IMF sixth review scheduled for next week, any positive outcome could be a key trigger for the local bourse.”
“Moreover, with the ongoing result season, certain sectors and scrips are expected to stay under the limelight. Albeit, we expect the market to be positive in the next week,” it said.
“The KSE-100 is currently trading at a PER of 5.1x (2022) compared to the Asia-Pacific regional average of 13.6x while offering a dividend yield of 8.6% versus 2.4% offered by the region,” the brokerage house stated.