Equity investors to find investment reasons in forthcoming data

Stocks market is still not out of the woods after snapping five-week positive rally last week as investors are expected to play safe, but forthcoming financials and industrial data might trigger upward movement, brokerages said.

“We foresee the market to move sideways in the upcoming sessions as the index is likely to take hints from upcoming results,” Habib Metro-Financial Services Limited said. “Hence, investors are suggested to stay active and take positions in fundamentally strong stocks.”

The capital market closed on a negative zone, ending continuous five weeks of rising trend as profit-taking set in because of lack of any big development, which could trigger some rally where corporate results also depressed the overall tone.

The week commenced on a positive note and the market gained more than 502 points on Monday as China came to Pakistan’s rescue and agreed to provide a loan of $2.5 billion to support depleting foreign exchange reserves.

Other news regarding gas infrastructure development cess settlement and issuance of directives by the State Bank of Pakistan for overseas investors to invest in Pakistan Banao Certificate also fueled investor sentiment.

Downgrading of long-term credit rating to B- from B by Standard and Poor’s coupled with pressure on international oil prices dented the sentiments.

The benchmark KSE-100 went down 225 points or 0.55 percent to close at 40,887 points. Average daily volume for the outgoing week was up 10 percent to 192 million shares.

Contribution to the downside was led by commercial banks down 185 points due to selling from mutual funds and insurance companies and oil and gas exploration companies falling 83 points due to decline in international oil price.

Sectors that contributed positively to the index were cement up 106 points amid correction in international coal price by four percent week-on-week to $86/ton and automobile assembler rising 28 points.

Foreign buying clocked in at $12.2 million compared to net buying of $12.3 million. Local selling of $22.6 million was reported by mutual funds followed by other organisations $1.1 million.

Topline Securities said the Employees’ Old-Age Benefits Institution is unable to collect proper and due

contribution from the provinces after the 18th amendment into the constitution.

The government decided not to make any cut in the country’s defence budget, preferring instead to increase it through the generation of more revenue.

Arif Habib Limited expected the market to remain range bound given no material event expected in the upcoming week.

Visit of Saudi crown prince expected on 16 February may uncover investment for a new oil refinery and other ventures.

In addition, Prime Minister Imran Khan is visiting UAE on 10 February to attend the World Government Summit where he will encourage foreigners to invest in different sectors in Pakistan.

Supplementary mini-budget is expected to be approved in the upcoming week. Among key data points, automobile sales data is also due to be reported in the coming week.