Stocks likely to face listless trading in shortened weekdays

Stocks may undergo listless trading during the shortened weekdays next week due to Eid holidays; although investors eye upcoming auto sales and foreign selling numbers to make decisions, dealers said.

An analyst at Habib Metro Financial Service said a smooth transition to the general elections with the caretaker prime minister and his cabinet taking charge of the proceedings helped in easing concerns and lifted investors’ mood that pushed up the benchmark index.

The capital market witnessed fresh buying in the selected shares during the outgoing week as investors’ confidence over the political setup improved. Appointment of Shamshad Akhtar as the finance minister would bring some changes to the ailing economy, analysts said.

KSE-100 Index of Pakistan Stock Exchange rose 2.4 percent or 1,035 points to 43,948 points. Trading activity also picked up and average daily traded volume and value grew 26 percent and 45 percent to 169 million shares and 78 million dollars, respectively in the four sessions.

Banks, cements and oil marketing companies remained the major index movers, contributing 558 points, 126 points and 108 points, respectively during the week.

Banks rose 4.6 percent, led by an expectation of continued increase in interest rate on rising inflation. Banking stocks witnessed a bullish spell after a 50 basis points increase in interest rate announced by the central bank. Oil and gas marketing companies gained 5.8 percent on new tariff regime for gas distribution companies, offering returns significantly higher than the previously recommended. Sui Northern Gas Pipelines and Sui Southern Gas Company rose 12.3 percent and 6.9 percent, contributing 70 points and 15 points to the benchmark index, respectively. Refinery stocks enjoyed a field ride during the week as demand for furnace oil surged to the new peaks given its high off-take in the energy sector, with rising temperatures across the country.

Shamshad Akhtar’s appointment, coincided with the International Monetary Fund’s deliberations to assess the country’s economic health, lent much-needed support to an otherwise jittery environment, analysts said. An analyst said foreign participants offloaded stocks of banking, cement and oil marketing companies. Foreigners remained net sellers for the fifth consecutive week, amounting to $29.5 million versus net selling of $17.5 million last week. Amongst local investors, insurance sector was net buyer of $17.9 million, whereas individuals were net buyers of $4.9 million. An analyst at BMA Capital Management said positive momentum is expected to continue with the caretaker government showing willingness to handle economic risks and expectation of timely elections. Analysts said investors are closely tracking upcoming Financial Action Task Force’s meeting scheduled on 24 to 26 June.

It would decide whether or not Pakistan should be included into the grey list. Auto industry is anticipated to release sale numbers next week, which will be closely tracked by market. “We maintain our liking for defensive and high-yield stocks as another round of rupee devaluation is around the corner,” an analyst added.