Investors hunt for triggers; blue-chips in focus

Investors are trawling for the triggers in the market and may bet on the sectors, which are most likely to get affected from budgetary measures, dealers said.  

“Market during the week remained flat ahead of upcoming budget and MSCI (Morgan Stanley Capital International) reclassification decision in June 2016,” said analyst Fahad Qasim at Topline Securities.

Pakistan Stock Exchange’s (PSX) benchmark 100-share Index gained 0.76 points to close the week ended on May 27 at 36,694.26 points. KSE 30-share Index shed 152.68 points, or 0.71 percent, to end at 21,243.27 points.

The average weekly trading volumes declined 23 percent to 249 million shares/day.

Foreigners were net sellers of equities worth $3.8 million in the previous week. Net selling to the tune of six million dollars and $1.9 million was seen in banking and cement sectors, respectively. On the other hand, oil and gas marketing sector invited net investment of three million dollars.

Analyst Raheel Ashraf at JS Global said the bullish rally took a breather during the previous week, as futures rollover kept liquidity low in the market.

“Commercial banks (-3.2 percent week-on-week) received a battering as the State Bank of Pakistan (SBP) announced a 25 basis points cut in the discount rate over the weekend, while food producers (+3.8 percent) were the star performers of the week,” Ashraf said.

A surge in international crude oil prices to $50/barrel during the week failed to bring any excitement in the oil sector, which closed 0.2 percent down.

Following the SBP’s decision to further decrease the discount rate from six percent to 5.75 percent, the banking sector bore the brunt, denting the index with 306 points.

Adding woes to the sector was continued foreign selling to the tune of $6.01 million. 

News regarding sale of stakes in EFOODS and EFERT gained momentum. Ultimately, ENGRO garnered the bulls, helping the index maintain its current level. Additionally, the week also witnessed exorbitant volume in K-Electric Limited for the week.

During the week under review, HASCOL announced to build 200,000 tons oil storage facility at Port Qasim. 

Banking spreads hit a new low of 5.09 percent on lower lending rates. Government reported to increase development budget by Rs161 billion in the next budget and foreign exchange reserves touched an all-time high of $21.6 billion.

Sector wise recommendations from various bodies are expected to drive the market this coming week.

Information flow regarding the budget is expected to increase, which may increase volatility and present trading opportunities.  

With the MSCI announcement around the corner, investors are advised to focus on fundamentally strong scrips.