PSX weekly review: Lacklustre week drags KSE-100 index downwards

• KSE-100 index dives 403 points to close the week at 45,675.87.
• Concerns over higher oil prices, Ukraine-Russia conflict keep investors on sidelines.
• “We expect the market to remain positive in the upcoming week,” AHL predicts.

KARACHI: The Pakistan Stock Exchange (PSX) experienced sombre trading in the outgoing week as lack of positive triggers dimmed investor sentiments and fuelled profit-taking.

Resultantly, the KSE-100 index dived 403 points or 0.9% to close the week at 45,675.87 points.

“Major reason for the negative momentum this week was higher oil prices triggered by the Ukraine-Russia conflict,” said JS Global analyst Waqas Ghani.

The market commenced the week on a negative note on the back of tensions over possible war between Russia and Ukraine (which shot up international oil prices) tagged with prevailing political situation in the country.

However, the market took some respite after news of Russian troops’ withdrawal from Ukraine’s border and recovered lost ground.

Nevertheless, the market sentiment remained subdued throughout the week due to to an increase in local petroleum prices, which raised concerns over inflation.

Furthermore, the massive jump in trade deficit by 93% year-on-year in the seven months of the ongoing fiscal year fuelled the negative sentiment. Moreover, below expectation financial result of certain scrips further deteriorated the momentum.

Whereas, passing of Oil and Gas Regulatory Authority (Amendment) Bill, 2022 and Weighted Average Cost of Gas (WACOG) Bill by Senate kept gas utilities and certain scrips of oil marketing companies and exploration and production in the limelight, cushioning the overall dip.

Other major developments during the week were: petrol price hiked by massive Rs12 a litre, the Economic Coordination Commitee approved urea import cost estimates, January textile group exports declined by 4.38% to $1.55 billion month-month and forex reserves dropped $231 million.

Meanwhile, foreign selling was witnessed this week, clocking in at $1.97 million against a net sell of $5.9 million recorded last week. Selling was witnessed in technology ($1.5 million), and all commercial banks ($0.5 million).

On the domestic front, major buying was reported by banks ($4.9 million), followed by individuals ($2.4 million).

During the week under review, average volumes clocked in at 191 million shares (down by 8% week-on-week), while average value traded settled at $30 million (down by 36% week-on-week).

Major gainers and losers of week

Sector-wise negative contributions came from commercial banks (-88 points), fertiliser (-68 points), power generation and distribution (-66 points), technology and communication (-39 points), and cement (-37 points).

On the flip side, positive contributions came from auto assembler (+9 points), chemical (+9 points), and oil and gas exploration companies (+5 points).

Scrip-wise major losers were Hubco (-67 points), Engro Corporation (-62 points), Meezan Bank (-36 points) and Systems Limited (-35 points) and Dawood Herculous (-34 points).

Meanwhile, scrip-wise major gainers were Engro Fertiliser (+55 points), Sui Northern Gas Pipelines (+24 points), and Millat Tractors (+22 points).

Outlook for next week

A report from Arif Habib Limited predicted: “We expect the market to remain positive in the upcoming week.”

Prime Minister Imran Khan is expected to visit Moscow in the next week, with agenda of two mega gas pipeline projects in order to cater depleting gas reserves, it said, adding that signing of a commercial agreement during this visit will be a key catalyst.

The brokerage house noted: “Keeping in view the ongoing result season, certain sectors and scrips are expected to stay under limelight.”

“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 8.6% versus 2.3% offered by the region,” the brokerage house stated.