Ramazan slows down investors appetite for stocks

Pakistan Stock Exchange closed flat during the outgoing week, as both negative and positive developments were pared, leaving no room for the index to score big, dealers said.

Analyst from Arif Habib said they expected the market to remain range-bound in the upcoming week. “With commencement of the month of Ramazan, volumes may dry down.”

Extension in the lockdown by the federal government might also build pressure on businesses, keeping investor sentiment lacklustre, the analyst added.

Total number of cases has now reached to 11,155 and increase of public movement during Ramazan might shore up this number further, an analyst from BMA Capital Management said.

On the other hand, ongoing result season would likely keep investors engaged. “Inflation for the month of April is also likely to set the tone for future interest rate dynamics,” he added.

Pakistan Stock Exchange (PSX) benchmark KSE-100 fell 0.08 percent or 25 points to close at 32,806 points during the outgoing week. Average volumes for the outgoing week were up 46.3 percent to 261 million shares. Likewise, value traded clocked-in at $71 million dollars, up 88.5 percent.

Foreign offloading during the week arrived at $2.5 million compared to a net sell of $14.2 million last week. Major selling was witnessed in fertiliser ($4.8 million) and banks ($4.1 million). On the local front, major selling was reported by individuals ($11.7 million) and broker proprietary ($4.7 million).

Analyst from Habib Metro-Financial Services said, “We expect the market to take cues from the ongoing results season, while the broader direction is likely to be determined by prevailing macro-economic conditions.”

The local spread of COVID-19 has built pace, which could potentially unnerve market participants in the near-term, while on the whole the index remains highly attractive for long-term bets, he added.

Construction package and lending rate cut were positive for the market. Leveraged stocks gained momentum like cements and steel amid rate cut and news of potential price hikes, but investors resorted to profit-taking by week-end as results were disappointing.

Moreover, yields further fell by 2.18 percent, 2.50 percent in the recent treasury bills auction, while the rupee also appreciated in value against greenback by 2.1 percent during the week. This was followed by further drop in bond yields in the secondary market, as investors priced in expectations of further cut in interest rates.

Local oil and exploration stocks came under pressure, as US crude oil market crashed and traders scrambled to clear unwanted crude. It traded below $37/barrel for the first time in history. The price fell, as the market had no buyers, and the world has been out of storage facilities.

Sentiments of the banking sector eroded on the back of central bank decision, barring banks from declaring dividends in the March and June quarter of the current year to conserve capital.

In other news, Pakistan’s current account deficit narrowed 73 percent in nine months, SBP allowed payment of dividends already approved by banks’ board of directors, and Moody’s said Rs1.2 trillion stimulus would widen budget deficit to 10 percent of GDP, while IMF disbursed $1.39 billion to Pakistan.

Scrip wise major losers were oil and gas exploration companies, down 48.6 points, power generation and distribution, down 43.8 points, and commercial banks, down 43.5 points.

Major gainers were cement, up 128.2 points, fertiliser, up 63.9 points, and automobile assemblers, up 34 points.