Stocks expected to post recovery on energy gains

Stocks are expected to show recovery in the coming week as blue-chip energy counter is likely to have rush on government’s liquidity injection, while positive current account tally may invoke rally in the market upset by three weeks of consecutive losses, dealers said.

Brokerage Arif Habib Securities said the benchmark index is expected to witness a rebound given improvement in economy as current account deficit narrowed 17 percent to $8.4 billion in the July-January and materialisation of Saudi deal, which will improve the investment climate.

The capital market for the third consecutive week witnessed downward trend owing to some depressing corporate results and continuous tension between India and Pakistan, forcing investors to stay from the rings.

The KSE 100-share Index of the Pakistan Stock Exchange lost 471 points or 1.2 percent during the outgoing week closing at 40,016 points level.

Power generation and distribution, banks and pharmaceuticals were the worst performers as they ate away 315 points. Oil and gas exploration sector offered the index some support as it gained 85 points.

The average daily volumes for the week were down 22 percent to 105 million shares. Likewise, traded value declined 14 percent to $39 million.

BMA Capital Management said the government is widely expected to inject some liquidity into the energy sector over the coming week, materialisation of which may ignite investor sentiments in the energy space.

“Furthermore, we opine that Pakistan’s potential entry into an IMF (International Monetary Fund) program (April end or early May’19) may go a long way in boosting investor confidence,” the brokerage said in a report.

Brokerage Topline Securities said the benchmark index continued its downward trend as it closed in the red for a third consecutive week.

The visit from the Saudi Crown Prince, who signed memoranda of understanding amounting to $20 billion during his stay, was unable to alter investors’ sentiments due to crumbling Indo-Pak relations and weak corporate earnings.

JS Group said statements from the other side of the border to isolate Pakistan diplomatically, including imposition of 200 percent customs duty on exports into India and other punitive measures caused market participants to proceed with caution and had an overbearing impact on performance.

The brokerage said corporate results were generally in line with or higher than expectations in some cases. But, they did little to improve the trend.

Exacerbating the issue was the coincidence of the week with futures’ rollover, which also negatively affected market performance.

Analysts said there might have been a sigh of relief for policymakers as the current account deficit during January declined 48 percent compared with December on a sharp reduction in trade deficit, whereas some support for overall balance of payments was also visible via loans from friendly countries.

Foreign buying continued clocking in at $3.5 million. Major buying was witnessed in cements ($3.3 million) and commercial banks ($1.4 million). Selling was also reported by individuals ($4.7 million) followed by companies ($1 million).