PSX may come out of woods; results in focus

Pakistan stocks market may breach through a key technical level of 34,000 points on stable policy rate, while investors will closely monitor results and oil movement in the upcoming sessions, dealers said on Saturday.

“The (SBP’s) decision would invite renewed buying at the banking counters, which are available at attractive prices due to recent corrections,” said Faisal Shahji at Standard Capital Securities.

The central bank kept the interest rate unvaried in its fifth monetary policy announcement of the current fiscal year as it is seeing traction in economic demand and an uptick in inflation numbers.  

The Pakistan Stock Exchange’s (PSX) benchmark KSE 100-share Index is just 32.46 points away from the technical level. The index rose 517.92 points, or 1.54 percent, to close at 33,967.54 points during the last week.

Average daily volumes soared 96 percent to seven-month high at 275.3 million last week. Average daily value increased 44 percent to Rs10.5 billion ($100 million). The market capitalization surged Rs119 billion to Rs7.07 trillion.

Shahji said the oil shares may also help in driving the market up in connection with the rebound in international oil prices. “Low oil inventories in the U.S. should keep oil in the black in the short-run,” he added.

He, however, warned that general industrial stocks in the sectors, including fertiliser, cement and steel, may become subject to profit-booking. Such stocks have gained substantially in the last five-six weeks. Status quo in the interest rate may also encourage investors to sell these leveraged stocks.

“Opposition parties’ uproar on Panama leaks will also keep likely gains in check the next week,” Shahji said.

Arif Habib Limited (AHL) said whimsical market activity may be a story of the past since a return of stable volumes suggests improving investor sentiments.

An expectation about an upgrade to the Morgan Stanley Capital International Emerging Markets index will keep interest in the market upbeat. “For a long-term timeframe we advise investors to stick with the fundamentally strong scrips,” added the AHL.

KASB Securities said the key points to keep an eye will be news related to MSCI consultation process and upcoming result season, which will likely boost the sentiment of the market.

“We expect potential earnings surprises in banks, cement, steel (long-rolled producers), and autos while fertilizer and oil and gas may not fare well in third quarter given pressure on prices,” it said.

Topline Securities said industrial metals and mining, food producers, and fixed line telecommunication sectors were among the performing sectors during the last week. They increased in the range of 5.4 and 9.7 percent. On the flip side, beverages fell 7.8 percent and tobacco declined 1.2 percent.

Foreigners were net buyers of $27.6 million worth of shares during the last week. This was mainly due to transaction, involving purchase of 15 percent stakes in Hascol Petroleum by Vitol Dubai, which resulted in net buying of $29.3 million in oil and gas marketing sector.

Net buying worth $8.7 million was seen in cement sector while net selling worth $5.8 million was seen in banks. Minus the Vitol inflows, foreigners sold shares (net) of around $400,000 last week against an outflow of $9.6 million in the prior week.

KASB Securities said Hum Network Limited, Nestle Pakistan Limited, TRG Pakistan, PTCL and Ibrahim Fibers were the major gainers, while Murree Brewery, EFU General Insurance, Indus Dyeing, National Foods, and Allied Bank Limited were the major losers in the benchmark index.