Saturday, March 05, 2022

PSX weekly review: Govt's relief package helps KSE-100 gain 1.2%

Market oscillates between red and green zones due to mix of positive, negative news

The stock board. — AFP/File
The stock board. — AFP/File

  • Market oscillates between red and green zones due to mix of positive, negative news.
  • KSE-100 index rebounds to close with 567 points at 44,551 points.
  • "We believe the market will remain jittery in the short term,” AHL predicts.

KARACHI: Despite a week marred by high-profile developments from geopolitical unrest to the rising commodity prices in the international market, the KSE-100 index managed to finish on a positive note. 

The outgoing week saw the index rebound to close with 567 points or 1.2% up at 44,551 points.

“After posting a sharp decline last week owing to the Russia-Ukraine crisis, the market exhibited a recovery trend throughout the week amid Prime Minister's relief package announcement increasing from 43,984 points to 44,803 points,” JS Global analyst Wasil Zaman said.

The week commenced on a positive note as Russia and Ukraine entered negotiations, however, things turned for the worse as talks halted, which caused global crude oil prices to soar past $114 per barrel in the international market.

Read more: FATF once again retains Pakistan on grey list

Moreover, the announcement of an industrial package triggered buying mid-week, albeit, the positive momentum could not sustain for long as the market plummeted over the noise of Russia’s military attack on Ukraine and rising commodity prices.

Prime Minister Imran Khan earlier this week slashed the petrol and diesel price by Rs10 per litre, saying that the prices would not be increased until the next budget, which is scheduled in June.

Moreover, he reduced electricity charges by Rs5 and waived 100% tax on the IT sector and announced a five-year tax exemption for overseas investors to bolster investment in Pakistan.

However, the trade deficit rose to $32 billion, increasing 82% during the eight-month of the fiscal year 2021-22 and inflation rose over 12% year-on-year, which kept the index under pressure as well.

Other major developments during the week were: Pakistan Democratic Movement (PDM) chief Fazlur Rehman said next three days crucial in terms of no-confidence movement, Oil and Gas Regulatory Authority raised gas prices, July-February trade deficit widened 82.2% to $31.959 billion year-on-year, first cargo under Saudi oil facility due late March, oil marketing companies’ sales increased by 10% year-on-year in February, Uzbek president discussed Trans-Afghan railway project during his visit, and Nepra approved some adjustments in KE tariff.

Read more: Pakistan, IMF talks on seventh review start today

Meanwhile, foreign selling was witnessed this week, clocking in at $0.97 million against a net sell of $3.24 million recorded last week. Selling was witnessed in exploration and production ($1.5 million), and banks ($1.4 million).

On the domestic front, major buying was reported by banks ($2.4 million), followed by brokers ($2.1 million).

During the week under review, average volumes clocked in at 215 million shares (down by 5% week-on-week), while average value traded settled at $43 million (up by 12% week-on-week).

Major gainers and losers of the week

Sector-wise positive contributions came in oil and gas exploration companies (+402 points), ii) technology and communication (+129 points), fertilizer (+95 points), chemical (+24 points) and power generation and distribution (+19 points).

Whereas sectors which contributed negatively were cement (-67 points), oil and gas marketing companies (-12 points), insurance (-12 points), automobile assembler (-11 points), and leather and tanneries (-8 points).

Scrip-wise major gainers were Pakistan Petroleum (+169 points), Oil and Gas Development Company (+136 points), TRG Pakistan (+117 points), Pakistan Oilfields (+74 points) and Engro Fertiliser (+37 points)

Meanwhile, scrip-wise major losers were Lucky Cement (-39 points), MCB (-34 points), Pakistan State Oil (-18 points), DG Khan Cement (-17 points) and Dawood Hercules (-16 points).

Outlook for next week

A report from Arif Habib Limited predicted: “We believe the market will remain jittery in the short term on account of geopolitical tensions and rising commodity prices.”

Key events to look out for include monetary policy meetings, Financial Action Task Force (FATF) decision, and an ongoing International Monetary Fund (IMF) review which will have an impact on the market, it said.

The brokerage house noted: “Keeping in view the ongoing result season, certain sectors and scrips are expected to stay under the limelight. We advise investors to prioritise long term blue chip scrips only.”

“The KSE-100 is currently trading at a PER of 5.0x (2022) compared to the Asia-Pacific regional average of 13.5x while offering a dividend yield of 8.8% versus 2.4% offered by the region,” the brokerage house stated.