Geopolitical, political events to drive PSX this week

KARACHI: After closing the week in green, with the benchmark KSE-100 Index gaining 567.2 points (+1.29 percent), Pakistan Stock Exchange (PSX) is likely to follow trend in global equity markets in the week starting today (Monday) amid geopolitical developments centring on Russia.
The market staged a recovery last week after shedding over 2,100 points in the preceding fortnight mainly due to the government’s relief measures, including cut in petrol and diesel prices by Rs10 a litre and electricity tariff by Rs5 per unit until June, and announcement of another amnesty scheme to bolster industrial investment.
However, tensions between Russia and Ukraine trimmed overall gains amid concerns over crude oil prices and supply chain disruption. Furthermore, the trade deficit rose to $32 billion, increasing 82 percent during July-February 2021-22 and inflation rose over 12 percent YoY, which kept the index under pressure as well.
Surging crude oil and commodity prices have rattled the financial and equity markets across the globe, and may also dent the investors’ confidence in the local bourse. Moreover, the opposition parties are turning up the heat on the government and the long march and expected no-trust move against the prime minister may keep the bourse under pressure.
The benchmark KSE-100 Index gained 567.2 points (+1.29 percent) to settle at 44,551.4 level. The KSE-30 Index gained 337.79 points (+1.98 percent) to close at 17,428.85 points. The benchmark KSE-100 is currently trading at a PER of 5.0x (2022) compared to Asia Pacific regional average of 13.5x while offering a dividend yield of 8.8 percent versus 2.4 percent offered by the region.
The sectors moving the index towards north were oil & gas exploration companies (402 points), technology & communication (129 points), fertilizer (95 points), chemical (24 points) and power generation & distribution (19 points). Scrip-wise positive contributors were PPL (169 points), OGDC (136 points), TRG (117 points), POL (74) and EFERT (37 points).
The sectors moving the index towards south were cement (67 points), oil & gas marketing companies (12 points), insurance (12 points), automobile assembler (11 points), and leather & tanneries (8 points). Scrip-wise negative contribution came from LUCK (39 points), MCB (34 points), PSO (18 points), DGKC (17 points) and DAWH (16 points).
Foreign selling continued this week, clocking-in at $ 0.97 million compared to a net sell of $ 3.24 million last week. Major selling was witnessed in E&P’s ($ 1.5 million) and banks ($ 1.4 million). On the local front, buying was reported by banks ($ 2.4 million) followed by brokers ($ 2.1 million). The mutual funds stood on the other side with net selling of $1.72mn. Average volumes clocked-in at 215 million shares (down by 5 percent WoW) while average value traded settled at $ 43 million (up by 12 per cent WoW).
In the coming week, the market gurus expect that the bourse is likely to stay jittery on geopolitical tensions and rising commodity prices. They said that the key events to look out for include the Monetary Policy Committee meeting and an ongoing International Monetary Fund (IMF) review which will have an impact on the market. Keeping in view the ongoing result season, certain sectors and scrips are expected to stay under limelight, they added. – TLTP