Budget proposals to remain key sentiments driver at PSX

The ongoing political uncertainty kept the equities under pressure during the week ended May 5; however, the Pakistan Stock Exchange (PSX) benchmark Index KSE-100 recovered over one percent by the end of the week on increased local participation in anticipation of foreign inflows, as the MSCI inclusion date comes closer.

The market fundamentals would take prominence with budget proposals being the key sentiments driver. Also, with Pakistan’s classification into the MSCI-EM in the current month, foreign activity may pick up in the coming weeks.

“Looks like local politics have hit the backburner, as investors at the PSX were more concerned with lapping up key MSCI-EM names ahead of the review on May 15, leading up to the actual upgrade on June 1, 2017,” Adnan Sami said in a report issued by Topline Securities.

The KSE-100 shares index gained 1.12 percent, or 550.23 points, to close the week at 49,851.13 points. KSE-30 shares index gained 1.72 percent, or 446.39 points, to end at 26,450.97 points.

Aggregate average volumes in the six likely MSCI scripts (HBL, UBL, MCB, LUCK, ENGRO and OGDC) shot up five percent during the week, while overall market participation contracted as the PSX’s average daily volumes declined 26 percent to 264 million shares/day.

Foreign portfolio investment witnessed an outflow of $19.3 million during the outgoing week, taking the 2017 foreign portfolio investment net outflows to $218.9 million so far as compared to the net outflows of $338.9 million during the entire 2016.

On the sector front; banks outperformed the index with their capitalisation growing 3.8 percent, as three big banks would be included in the MSCI-EM; while E&P’s shed four percent in value, as oil prices crashed on the concerns of a persisting supply overhang.  MSCI painted stocks led the surge with HBL up 7.4 percent, UBL up five percent, MCB up 5.6 percent, contributing a cumulative 439 points to the index, while Lucky Cement up 6.3 percent and Engro up 5.11 percent also came back in the limelight.

Oils were the major drag to the index with Mari Petroleum and Pakistan Oilfields Limited (POL) declining 3.8 percent and 2.6 percent, respectively, on the back of weakness in the international oil prices.

During the week, Pakistan Bureau of Statistics (PBS) released inflation for the month of April, which clocked in at 4.8 percent, slightly higher than the consensus estimates on the back of higher inflation in the prices of perishable items.

Other major updates during the week included ECC’s approval for cut in urea prices by Rs200/50kg bag, oil sales surged 12 percent in April, PIBTL commenced operations and Atlas Honda launched new 150cc bike.