Stocks to stay range-bound as inflation, gas tariff in focus

Stocks are likely to trade sideways next week as investors await inflation data for September, which is expected to remain high amid rising energy costs, dealers said.

The market will also monitor any update on the gas tariff adjustment, which has been delayed by the government.

“In the week ahead, the market will be closely monitoring the inflation number for the month of September which is expected to remain elevated and any update on the impending gas tariff adjustment,” brokerage Arif Habib Ltd said in its weekly market note.

During the four-day trading week, the market exhibited lacklustre activity, remaining relatively unchanged as investors were anticipating an impending increase in gas prices for the week, which did not materialize. "This anticipation, coupled with profit-taking activities, contributed to the subdued market performance."

The market closed at 46,233 points, shedding 189 points or 0.4 percent week-on-week. Average volumes arrived at 203 million shares (up by 46 percent weekonweek) while the average value traded settled at $23 million (up by 46 percent week-on-week).

Foreigner buying was witnessed during the week, clocking in at $0.19 million compared to a net buy of $0.29 million last week. Major buying was witnessed in commercial banks ($1.54 million) and oil & gas marketing companies ($0.22 million). On the local front, selling was reported by banks/DFIs ($3.66 million) followed by companies ($1.42 million).

Sector-wise negative contributions came from technology & communication (176 points), commercial banks (170 points), automobile assembler (59 points), fertilizer (34 points), and inv. banks/ inv. cos. / securities cos. (30 points). Scrip-wise negative contributors were SYS (166 points), HBL (111 points), MTL (61 points), UBL (47 points), and ENGRO (34 points).

Meanwhile, the sectors which contributed positively were cement (85 points), oil and gas exploration companies (52 points), and power generation & distribution (46 points).

Whereas, scrip-wise positive contributions came from LUCK (43 points), HUBC (41 points), POL (40 points), ILP (22 points), and EFUG (22 points).

The repatriation of profits and dividends by foreign investors on their investment in Pakistan sharply rose by 74.46 percent during the 2MFY24.

The rupee settled at 287.74, appreciating by RS4.02 or 1.4 percent. The central bank reserves depleted by $59 million, settling at $7.6 billion.

Muhammad Waqas Ghani, an analyst at JS Research, said benchmark index had a bearish start to the week.

The continued to display a persistent uptrend, concluding the trading week at Rs289 in the open market, resulting in a 2.1 percent week-on-week gain.

"This positive performance is on the back of efforts by the SBP which implemented measures to oversee the Forex market and enforce regulations against unauthorized currency operators."

On the political front, election commission released preliminary constituency delimitation lists during the week, based on the recently completed census. This significant move paves the way for the upcoming general elections scheduled for the last week of Jan-2024 and attempts to clear any uncertainties surrounding the matter.

Moreover, on the economic news front, data from the Economic Affairs Division disclosed that the country obtained loans totalling $3.21 billion from multiple financing sources during 2MFY24, this represents a significant increase compared to the $439 million borrowed in the same period last year.

According to SBP data, foreign investors remitted $49.2 million in profits and dividends during 2MFY24, a 45 percent year-on-year jump likely due to relaxed capital controls previously in place to curb foreign exchange outflows.