Stocks will most likely move both ways in tepid trade on lingering economic concerns, but results may set some select sectors on fire next week, traders said.
Country’s key capital market gauge, the KSE-100 Shares Index closed the week at 47,198 points, up 241 points or 0.5 percent week-on-week.
“We expect PSX (Pakistan Stock Exchange) to remain range-bound in the upcoming week. Keeping in view concerns over inflation, devaluation of rupee against the greenback and current account deficit, investors are expected to have a cautious approach,” analysts at Arif Habib Limited, said in a report.
Moreover, the report added that with the ongoing result season, certain sectors and scrips were expected to stay under the limelight.
“Our preferred stocks are HTL, EPCL, PSO, OGDC, HUBC, HBL, FFC, LUCK, ACPL, ENGRO, UBL, SNGP, and NML,” the brokerage said.
The market commenced the week on a negative note owing to continuing pressure from the last closing amid concerns over a trade deficit of $4.1 billion in August 2021. Furthermore, rupee depreciation to Rs168.02 further dampened the sentiment.
Week-on-week average volumes fell 7 percent to 429 million shares, while average traded value increased 5 percent to $87 million.
Foreign selling continued this week, settling at $18.6 million against a net sell of $5.9 million last week. Selling was witnessed in commercial banks ($10.9 million), cement ($6.1 million), and exploration and production ($0.9 million). On the domestic front, major buying was reported by individuals ($12.9 million) and insurance companies ($6.2 million).
The decision of MSCI to reclassify Pakistan to Frontier Market Index from Emerging Market in November 2021 led to foreign selling. The local investors were not in the financial position to purchase the stocks being sold by the foreign funds. Thus, it lost gains.
A report of Topline Securities said the MSCI decision to downgrade Pakistan came during the week, which affected the investor sentiment.
“The reclassification will take place in one step, coinciding with the Nov-2021 Semi-Annual Index Review,” the brokerage added.
MSCI Emerging Market Index has 3 constituents from Pakistan namely HBL, MCB and LUCK, whereas MSCI FM Index is simulated to have 4 constituents – with OGDC being the additional.
However, towards the end of the week, the market turned positive, since scrips were oversold and trading at attractive valuations. A surge in remittances by 27 percent year-on-year to $2.7 billion in August 2021 also improved the sentiment.
One analyst said that automotive sales data for the month of August also arrived during the outgoing week, which showed a surge of around 81 percent in the passenger car sales. The sales would have a positive impact on auto stocks, he said.
Sector-wise positive contributions came from technology & communication (214 points), miscellaneous (168 points), commercial banks (148 points), pharmaceuticals (59 points), and food & personal care products (14 points), while stock-wise positive contributors were PSEL (164 points), MEBL (147 points), SYS (115 points), TRG (99 points), and NESTLE (39 points).
Sectors that contributed negatively included cement (155 points), oil & gas exploration companies (56 points), and fertiliser (34 points). The stock-wise negative contribution came from LUCK (103 points), HBL (57 points), and ENGRO (51 points).
Other major developments impacting the listed names were: PIBT heralded it would invest $70 million in additional cargo handling, IMC announced a $100 million investment on hybrid electric vehicles production, OGDCL discovered gas and condensate in Khyber Pakhtunkhwa at Wali #01 well, and Fauji Foods disclosed it was planning to raise Rs7.8 billion via rights issue.