The capital market is likely to see some fresh spurt as the democratic transition has taken place consecutively for the third times, but much would now depend on how the new government handles the economic issues which shattered the investor confidence, dealers said.
“We expect the market to display positivity in a short trading week next week due to Eid holidays,” Samiullah Tariq, director research at Arif Habib Limited said. “Investors are expected to remain upbeat as the new PTI- (Pakistan Tehreek-e-Insaf) led government takes charge and the third consecutive democratic era begins.”
The market relapsed in the outgoing week as foreign portfolio outflows persisted along with some disappointing earnings results. The KSE 100-share Index shed 396 points or 0.9 percent to close at 42,446 points. Moreover, the average traded volumes were on the lower side during the week with 89.39 million shares traded on the main board and 161.21 million shares traded on the broader market.
Banks remained the major index dampener with alone Habib Bank, down 6 percent, contributing 142 points to the 100 Index decline.
Foreign portfolio investors sold shares worth $6.6 million during the week followed by mutual funds with net selling of $6.2 million. Individuals with $5.9 million and insurance companies with $5.5 million, however, stood as the major buyers.
Major losers, during the week, included PAEL, down 10 percent on dismal earnings’ announcement, and Sui Southern Gas Company dropping seven percent on news that it lost a case in international arbitration for failing to provide gas to Habibullah Coastal Power Company. Trading also took under consideration the developments during the week, including the central bank’s foreign exchange reserves sliding $216 million to $10.15 billion, an expected merger of Summit Bank and Sindh Bank by September-end, and power sector receivables surging to Rs896 billion.
Habib Metropolitan Financial Services said as clarity emerges on the political front the focus is now likely to shift towards the economic fundamentals of the country, which continue to exhibit a negative outlook.
“Hard decisions need to be taken to address the myriad of issues, which can drive growth lower in the short to medium term. However, this can be a catalyst for eventual long term improvement,” the brokerage said in a report. BMA Capital Management said investors are likely to focus on the new government’s strategy in dealing with economic imbalances.
“Any positive news on potential inflows from multilateral institutions, friendly countries or both, are likely to be welcomed by market participants,” the brokerage said. “With the last batch of corporate earnings expected in the upcoming week, we expect investors to remain vigilant of earnings surprise. Better than expected results may trigger rally in select sectors.”