PSX is likely to remain tricky during the week

KARACHI: Pakistan Stock Exchange (PSX) is likely to remain tricky in the week starting today (Monday) on the back of extraordinary gains last week, result season, political clarity and expected rollover of Chinese loans worth $2.3 billion.
The outgoing week proved to be an outstanding one for the stock market as the benchmark index surged from 44,444.58 to 46,601.54 points during the week, witnessing a gain of 2,156.96 points (4.85 percent), which has been the highest weekly gain since April 2020. The market has gained over 3,000 points in the last six sessions. Keeping this huge gain in the last week in mind, it seems that the market may move towards correction once it crosses the 47,000 point level.
A report from Arif Habib Limited predicted that the market will remain positive in the upcoming week. With the commencement of the result season and clarity on the political front, certain sectors and scrips are expected to stay under the limelight. “Furthermore, we are expecting the rollover of Chinese loans worth $2.3 billion and IMF negotiations will help bolster our foreign exchange reserves.,” the report said.
The report said that any dip in oil prices should also have a positive impact on the equity bourse, adding the KSE-100 is currently trading at a PER of 5.0x (2022) compared to the Asia-Pacific regional average of 11.5x while offering a dividend yield of 8.3 percent versus 2.6 percent offered by the region.
Besides political clarity, the rupee recovered against the dollar at a rapid pace last week, marking a 1.69% appreciation. Additionally, the country received record-high remittances this month clocking in at $28.3 billion, showing a 28% increase month-on-month, on account of Ramzan and Eid.
Other major developments during the week were: SBP’s reserves slip below $11 billion, banks approved Rs180 billion in housing loans, Pakistan Telecommunication Authority (PTA) renewed mobile operator licence for $486 million, cars’ sales surged 53.78% in nine months, Rs1 billion Islamic finance facility for renewable energy power plants, weekly inflation witnessed the biggest rise since November.
Meanwhile, foreign buying was witnessed this week, clocking in at $1.29 million against a net sell of $3.78 million recorded last week. Buying was witnessed in technology ($2.21 million), and fertilizer ($1.16 million).
On the domestic front, major selling was reported by a mutual fund ($9.89 million), followed by insurance companies ($7.76 million). During the week under review, average volumes clocked in at 477 million shares (up by 213% week-on-week), while average value trade settled at $66.3 million (up by 135.6% week-on-week).
Sector-wise positive contributions came from commercial banks (395 points), fertilizer (292 points), technology and communication (268 points), cement (241 points), and refinery (129 points). On the flip side, negative contributions came from real estate investment trusts (2.19 points), and vanaspati and allied industries (1.55 points). – TLTP