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Friday March 29, 2024

Stocks market sees respite in external support

By Danyal Haris
September 30, 2018

All eyes are set on outcomes of an upcoming meeting of Saudi’s delegation and IMF’s negotiation for fragile current account as they are to set direction of the market having bid farewell to dull financials, dealers said.

Brokerage Habib Metro-Finance Securities said earnings season has come to a conclusion with no major surprises across all the sectors with the exception of Bank Al-Falah and Engro Fertilizer amongst notable names.

“We maintain cautious stance and recommend exposure limited to fundamentally sound blue-chips that offer decent yields,” it said. “High interest rates and likely rupee depreciation warrant distance from the leveraged stocks.”

The KSE-100 Index of Pakistan Stock Exchange (PSX) slipped 0.78 percent or 321.54 points during the outgoing week to close at 40,999 points.

Major reason for the decline was government’s indecisiveness on electricity price hike and a bailout from the International Monetary Fund (IMF).

A high profile Saudi delegation is scheduled to visit the country next week. The agenda of the delegation may include discussion on potential Saudi Arabia’s participation in China Pakistan Economic Corridor and support to balance of payments.

The dealers said the market will also closely track the outcomes of IMF’s Article IV consultation with Pakistan. Any official statement hinting at the country’s potential entry into IMF program may help in calming jitters.

Dwindling foreign exchange reserves and expectation of an interest rate hike all played their part in the index’s muted moves during the week.

Foreign investors continued to remain net sellers and sold equities worth $9.4 million during the week, including $6.5 million in banks and $5.5 million in oil and gas.

Conversely, cement sector witnessed buying of $6.1 million and fertiliser $0.5 million.

Cement sector gained 113 points as investors flocked to get hold of stocks on reports of an expected price hike.

Food producers rising 1.9 percent and banks up 1.1 percent remained top performers, whereas engineering and automobile and parts remained laggards, down 6.9 percent and 6.2 percent, respectively.

Topline Securities said fertiliser and chemical sectors remained under pressure, cumulatively pulling the index down 210 points amid announcement of higher gas tariffs and anticipated increase in electricity prices.

BMA Capital Management said the government is expected to finalise the recently announced proposals for supplementary budget and it is likely to fine-tune its advice to lift ban on non-filers to buy cars and properties.