Stocks likely to gain on PM, Trump moot

The capital market remained under the influence of selling pressure, where host of activities like political happenings and increase in benchmark interest rate forced the investors either to sell their holdings or stay away from the market until the dust settles.

The benchmark KSE-100 shares index declined 3.6 percent or 1,214 points to close at 32,459 points level at the end of the week.

An analyst from Arif Habib said that Prime Minister Imran Khan was expected to meet President Trump next week for a reset in bilateral ties, which was likely to play a pivotal role in rejuvenating sentiments of investors.

Moreover, arrest during the outgoing week of a leader of a proscribed organisation has sent a positive signal to the international fraternity about Pakistan’s seriousness to address global pressure to dismantle terror networks, and this should have a positive bearing on the Financial Action Task Force (FATF) review in October.

Foreign buying was witnessed this week clocking-in at $6.44 million compared to net buy of $5.91 million last week.

Buying was witnessed in cement ($3.7 million) and banks ($3.2 million).

On the domestic front, major selling was reported by mutual funds $19.3 million; however, individuals remained net buyers of $9.9 million.

Average Volumes settled at 106 million shares (up by 107 percent week on week) while average value traded clocked-in at $23 million (up by 83 percent week on week basis).

Selling pressure in the local bourse intensified further this week. As per expectations, the SBP raised the policy rate by 100 basis points, settling at 13.25 percent.

However, the MPS radiated various positive signals that lent weight to the deduction that this might be the final rate hike by the SBP.

Also, monetary easing was a realistic possibility in the near future as inflationary pressure in the economy was expected to drastically recede during the second half of the current fiscal year.

In other news, political noise returned following arrest of another former prime minister in an alleged LNG scam.

Based on NCCPL data, foreigners remained net buyers amounting to $2.27 million. On the local side, mutual funds remained net sellers at $5.4 million.

Sector-wise negative contributions were led by oil and gas exploration companies slipping by (227 points), fertiliser by (174 points), commercial banks (155 points), power generation and distribution by (109 points), and textile composite by (82 points).

An analyst from BMA Capital

Management said the investor’s focus was now expected to tilt towards

the upcoming maiden meeting of Prime Minister Imran Khan with

President Donald Trump in US on July 22, 2019 that might lead to improvement of bilateral ties among the two nations.

“Moreover, PIB auction due in the upcoming week will be of key importance to guide interest rate direction (we believe interest rate has peaked after the recent rate hike).

Further, with result season scheduled to kick-off next week, investors may go hunting for value picks, thus leading to increased market activity,” he said.