Equity investors eye triggers to offset weekly losses

Equity market fell around 1.4 percent during the outgoing week with banks, cement, oil and exploration and tobacco companies battered on lack clarity from the government about the package from China to help support the ailing economy.

The week commenced on a negative note, with 1,000 points being wiped off the market within the first two days. That was due to the concerns over modalities not being finalised with the Chinese government during Prime Minister Imran Khan’s visit earlier this month.

The benchmark 100-share Index of Pakistan Stock Exchange shed

1.4 percent or 615 points during the week with the index closed at 41,389 points.

Bulls rushed in on Wednesday with the Finance Minister Asad Umer asserting that Pakistan recovered from balance of payments crisis. Rising inflation and potential increase in interest rates, however, kept the market momentum suppressed.

Sector-wise negative contribution came from commercial banks losing 278 points, oil and gas exploration companies 165 points amid fall in international crude oil prices, cement 105 points on expected prices regulation, tobacco 64 points, and oil and gas marketing companies shedding 45 points. Positive contributions were led by Fertiliser sector (102 points) and technology and communication shares (24 points).

Topline Securities said the market declined on a potential exclusion of select stocks from the Morgan Stanley Capital International emerging market index.

After the financial team arrived from China, Finance Minister Asad Umar and Advisor to Prime Minister on textile and industries announced that soon package would be unfolded, which would double exports to China. That helped textile stocks gain investors’ attention.

Export-led policies of the new

government also helped blue-chips gain one to three percent during the week.

Brokerage Arif Habib Limited said the delegates visited Beijing to settle economic assistance modalities, which could potentially revive investors’ sentiment.

The International Monetary Fund’s team is presently in Pakistan to negotiate a possible bailout package and its terms and conditions. The country may, however, not be required to seek a higher financial package from IMF if China announces an attractive economic aid.

“We expect the market to imitate any positive triggers on the economic front,” the brokerage said in the report.

Habib Metro-Financial Service expects the market to remain volatile in the near-term due to worsening economic indicators and recommended exposure to blue-chip shares.

BMA Capital Management said participants are likely to keenly track the developments with IMF talks underway.

The same is expected to play a key role in setting the market direction.

Among the key data points, automobile sales data for October are expected early next week where any positive surprise may attract investor’s interest in the sector.