Pakistan stocks may continue upward trend on foreign support

Pakistan stocks are likely to extend gains as investors, cheering return of foreign portfolio funds and a slight recovery in international oil prices, will take fresh positions at the beaten-up counters, dealers said.

“A big drop in FIPI (foreign investors portfolio investment) outflow last week coupled with stability in crude oil prices will help stabilise the market sentiments,” KASB Securities said in a comment.

Foreigners offloaded shares (net) worth $1.6 million during the last week as compared to $4.8 million in the preceding week and $13.2 million in the week earlier than that. Besides, they made a significant buying in cement sector during the last week.

The Pakistan Stock Exchange’s benchmark KSE 100-share Index rose 1,877 points, or 6.14 percent, in the last eight consecutive sessions and closed one-month high at 32,441.74 points on Friday.  Alone in the week ended Friday, the index increased 1,147.66 points, or 3.66 percent.

Average daily volumes were flat at 135 million shares. Average daily value increased 31 percent to Rs8.2 billion ($78 million). Market capitalisation surged Rs251 billion to Rs6.79 trillion.  The KASB’s report said the stability in commodity price has effectively reduced the risk on corporate earnings and, “should allow the market to refocus on fundamentals and valuation.”

“We believe the news about Engro Foods (buyout) will have more sustainable impact on Engro Foods and Engro Corporation stock prices and the market sentiment,” the report said. “Expectations of another policy rate cut are increasing. We continue to favour exploration and production and selected refining companies.”

Arif Habib Limited expects the market to remain enchanting next week owing to the stability in regional markets amid ease in global political and economic tensions.

Elixir Securities said investor confidence was strengthened in the outgoing week. Low volumes are likely to continue in the coming week, while investors are expected to continue to track foreign participation and commodity prices.  Shajar Capital said the market is expected to gain traction in March on the back of massive reduction in domestic petroleum prices and appreciable decline in power tariff. 

It said peak cement demand and a likely recovery in urea sales are expected to renew investors’ interest in the cement and fertiliser sectors. Topeline Securities said investors were interested cement, auto and oil exploration sectors during the last week. 

Top performing sectors of the week were oil and gas (up 9.2 percent), household goods (surging 7.7 percent) and construction and materials (increasing 5.9 percent). Tobacco and Multiutilities saw losses as they fell 4.7 percent and 2.3 percent, respectively. Engro Foods Limited, Engro Corporation, Dawood Hercules, Mari Gas and Feroze1888 were the major gainers. Hum Network Limited, Lalpir Power Limited, Punjab Oil, Pakistan Tobacco Company, and Associated Services Limited were the major losers in the benchmark index during the last week.