Pakistan stocks likely to pick up momentum next week

Pakistan stocks continued to experience buoyancy during the week ended December 30, 2016, while the activity is expected to pick up momentum next week with the start of the results season.  The local bourse touched the highest-ever levels in the last trading session of 2016.

“Investors' sentiment remained positive towards the banking and cement sectors, while slowdown in foreign selling further supported the local market in the outgoing week,” Fahad Qasim at Topline Securities, said.

The KSE-100 shares index gained 1,172.98 points, or 2.51 percent, to end at 47,806.97 points. KSE-30 shares index gained 699.97 points, or 2.78 percent, to close the week at 25,851.71 points. The average daily turnover declined 15 percent to 286 million shares/day.  Top three gainers over the outgoing week remained tobacco, food & personal care and commercial banks, which went up 17.6 percent, 4.8 percent and 2.5 percent, respectively, while the textile sector posted a decline of 0.6 percent in the outgoing week. Foreigners remained net sellers of equities worth $19.1 million during the week.  An analyst at BIPL Securities said the week started on a positive note after three consecutive sessions of profit-taking.  “Despite oil prices supporting the heavy weights, the index was only able to post nominal gains over the week and closed 2.5 percent up. The closing; however, was at an all-time high, providing a befitting end to CY16 where market performed 46 percent with Foreign Institutions Portfolio Investment (FIPI) registering an outflow of $340 million,” a report issued by BIPL Securities said.  Dealers said cherry picking was followed by investors during the week, especially in the main board stocks, while the sideboards garnered the less-than-usual retail attention.  Fertiliser sector performed after the sales for November 2016 posted 10 percent increase, while approval by the ECC on additional gas supply of 26mmcfd from Mari field to EFERT provided the much-needed clarity on the continuation of gas supply.  Oil stocks continued to support the index, as oil posted an increase of 2.6 percent in the aftermath of OPEC deal. On the other hand, banking sector remained in the limelight as annual result payout approaches. Cements also performed towards the latter half of the week in anticipation of good dispatch numbers for December 2016, while autos continued to ride on the positive sentiment surrounding the sector, amid upcoming new models. All in all, the activity remained low with investors preferring to be on the sidelines as the yearend coupled with a rollover week.  On the macro front, the Ogra has proposed up to Rs6.93/litre increase in POL prices next month, which could have a negative impact on inflation.  In the latest monthly bond auction, the government rejected all bids, making it the third auction in a row to have been rejected. The bid rates were much higher than the cutoff rates in the previous auction, which was possibly the reason for the government’s rejection.