PSX weekly review: Stock market snaps six weeks winning streak

• Jittery investors stay on the sidelines due to COVID-19 concerns.
• PSX closes outgoing week with a loss of 745 points.
• Players remain cautious ahead of MPC announcement next week.

After six uninterrupted weeks of closing in the green, the Pakistan Stock Exchange (PSX) succumbed to selling pressure in the outgoing week and closed with a loss of 745 points or 1.63% to settle at 45,018.28 points.

“The market remained under pressure throughout the week witnessing the biggest decline on Thursday,” said JS Global analyst Wasil Zaman.

The week kicked off on a bearish note as jittery investors opted to stay on the sidelines due to concerns over increasing COVID-19 cases in the country. 

The downtrend continued for the next three sessions as a lack of positive triggers coupled with the depreciation of the rupee against the US dollar amid increasing crude oil prices and commodity prices added to the woes of investors who opted to stay on the sidelines.

Moreover, during the week, market players remained cautious ahead of the monetary policy announcement scheduled for Monday.

Fortunately, on Friday — the last day of the trading week — the tables turned as the bulls returned to the bourse following an upward revision in Pakistan’s economic growth rate for the previous fiscal year due to rebasing.

It is pertinent to mention here that the government rebased the economy from the fiscal year 2005-06 to 2015-16, which expanded the size of the economy, propped up the growth rate and reduced the public debt.

Other major developments during the week were: Federal Board of Revenue (FBR) announced a 17% sales tax on commodities, sales tax zero-rating was withdrawn, forex reserves fell by $562 million, K-E asked NEPRA to return consumers Re0.67 per unit of electricity, and Pakistan Suzuki raised car prices owing to the "mini-budget".

Meanwhile, foreign selling was witnessed this week, clocking in at $2.09 million against a net buy of $0.53 million recorded last week. Selling was witnessed in oil marketing companies ($1.4 million), and technology and communication ($1 million).

On the domestic front, major buying was reported by individuals ($12.4 million), followed by banks ($5.9 million).

During the week under review, average volumes clocked in at 201 million shares (down by 43% week-on-week), while average value traded settled at $42 million (down by 17% week-on-week).

Major gainers and losers of week

Sector-wise negative contributions came from technology and communication (-241 points), commercial banks (-96 points), cement (-69 points), refinery (-65 points), and fertiliser (-63 points). On the flip side, positive contributions came from oil and gas exploration company (+36 points), power generation and distribution (+7 points) and real estate investment (+6 points).

Scrip-wise major losers were TRG Pakistan (-239 points), Cnergy Pakistan Limited (-31 points), MCB (-23 points), Dawood Hercules Corporation (-22 points) and Pakistan State Oil (-21 points). Meanwhile, major gainers were Kot Addu Power Company (+30 points), Mari Petroleum (+24 points) and BAHL (+23 points).

Outlook for next week

A report from Arif Habib Limited predicted: “Investors should remain cautious in the upcoming week as the Monetary Policy Committee (MPC) is meeting whereas inflationary pressure is set to rise in the backdrop of augmenting commodity prices.”

“Moreover, talks with the International Monetary Fund (IMF) are expected to resume on January 28 which could have a positive impact on the market,” it said.

“The KSE-100 is currently trading at a PER of 5.1x (2022) compared to the Asia-Pacific regional average of 13.9x while offering a dividend yield of 8.7% versus 2.3% offered by the region,” the brokerage house stated.