Downturn blessing in disguise; blue-chips in focus

Earning season and attractive results failed to whet buying appetite of the investors during the last week, but the downturn paves the way for investment in many blue-chips, analysts said on Saturday.  

Last week, Pakistan stock’s benchmark KSE 100-share Index gained 282.31 points, or 0.91 percent, to close at 31,294.08 points on Friday.

Average daily volume increased 12 percent to 138.2 million shares. The average daily value fell six percent to Rs6.2 billion. The market capitalisation surged Rs47 billion to Rs6.58 trillion.

A Topline Securities report said foreigners were net sellers of $4.8 million worth of stocks during the last week. They were net buyers in oil and gas and cement sectors with $1.9 million and $1.1 million, respectively, whereas net selling of $1.9 million was seen in banks and $0.9 million in electricity sector.

“The ongoing investigation by the National Accountability Court against the industrialists and brokers increased uncertainty,” KASB Securities said in a comment.

Faisal Shahji at Standard Capital Securities said the market may maintain an upward trend if brokers come out of the investigations unaffected.

The stocks company said the continuous declining volumes and the relative insensitivity of share prices to rather exciting results and dividends emerged as key concerns among investors.

“We believe fundamentals to remain strong in many sectors and the current downturn in the market presents a case for better entry point in many blue-chips,” it said. “We believe the upcoming inflation print for Feb (due next week) will likely raise market expectation of another rate cut and may bring IPPs (independent power producers) and other high-dividend yielding stocks into the limelight.”

Elixir Securities said culmination of key corporate results, coupled with increasing regulatory oversight, will weigh on investor sentiments. However, any surprise on the upcoming inflation print can become a sentiment booster.

Arif Habib Limited, in a note, said oil stocks may garner further interest in the coming week with oil prices stabilising around the current levels. “In addition, lower interest rates, robust demand and upward sticky coal prices provide an encouraging environment for cement scrips,” it said.  Shajar Capital said a likely decline in domestic petroleum prices is to negate the concerns of an expected higher inflation. “We foresee lower oil price environment to generate investor interest in cements, chemicals and textile,” it said.

Oil and gas, multi utilities and tobacco were among the major gainers, increasing 3.2 to 5.5 percent over the week. General industrials and food producers were the major losers, having declined six percent and 2.6 percent, respectively during the last week.

Associated Services Limited, Jahangir Siddiqui & Co, Ghani Glass, Kot Addu Power Company and Oil & Gas Development Co. were the major gainers, while Allied Rental Modaraba, Orix Leasing, Searle Pakistan, Mari Gas, and Adamjee Insurance were the major losers.