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Friday March 29, 2024

Stocks may move little in thin trade ahead of Eid holidays

By Danyal Haris
August 04, 2019

Thin news flow and upcoming Eid holidays towards the end of the week may keep stock market within narrow ranges, dealers said.

Equity trading volumes has been thin in recent weeks and this trend looks set to continue or may even strengthen in coming week. The holidays will start from August 12.

“We view the market to remain range bound due to lack of positive triggers in upcoming week followed by feeble results of cyclical sectors,” an analyst at Arif Habib Limited said.

The stock market ended the week in red as investors were cautious on weak economic data while poor corporate results also disappointed the market.

Inflation in July surged to 68 months high on increase in utility prices while monetary tightening and delay in state enterprise fund to support market allowed bear to dominate the trading floor.

Furthermore, political uncertainty also kept investors on the back foot. Traders have also announced a country wide protest and strike on CNIC condition.

In the upcoming week, result season may keep investors attuned. Volatility in international oil prices may take its toll on the bourse. Furthermore political landscape is likely to get more stable after opposition’s failed attempt to remove Senate’s chairman.

Pakistan Stock Exchange’s benchmark KSE-100 index closed below 32,000 points at 31,666 points, down by 437 points or 1.4 percent during the week. Daily average volumes settled at 56.9 million shares.

The week also saw some political unrest as the upper house took up the first ever no-confidence motion against its chairman and deputy Chairman where both of them successfully retained their position. Foreigners remained the net buyers with major interest seen in cement sector.

Scrip wise major losers were Pakistan Petroleum Limited (69 points), MCB Bank (62 points), Pakistan Tobacco Company Limited (57 points), United Bank Limited (56 points), and Bank AL Habib Limited (44 points). Whereas, scrip wise major gainers were Pakistan Oil Limited (37 points), Engro Chemicals (17 points), and Packages Limited (15 points).

Foreign investors mopped up shares worth $3.4 million during the week. Foreign investments were mainly concentrated in cements $3.1 million and banks $0.9 million. On the other side, E&Ps witnessed the bulk of outflows amounting to $2.1 million. Amongst local participants, mutual funds provided most of this liquidity of $4.2 million followed by companies $1.6 million.

Based on NCCPL data, foreigners continue to remain net buyers amounting to $3.4 million. On the local’s side, mutual funds remained net seller of $4.8 million, respectively

However, recent appreciation of rupee against the US dollar, which is trading at all-time lowest in terms of REER, would give confidence to foreign investors and attract foreign flows in the market. Whereas, key risks to the index include economic concerns on account of high current account deficit and slowdown in large scale manufacturing.