Stock investors zero in on positive triggers to cash valuation

Stocks are expected to register uneventful sessions next week despite results season and profit-taking may accelerate on any positive trigger in the market that has already gained almost eight percent so far during the month, dealers said.

“With commencement of the result season, we believe certain sectors / scrips may come under limelight in the upcoming week,” brokerage Arif Habib Limited said in a report.

“Pre-Eid jitters cannot be ruled out amid profit-taking at the current levels, however, funds continue to flow in the bourse as economic activity shows signs of revival.”

The stocks market closed on a positive note during the outgoing week, but gains were limited because of the selling from financial institutions and individuals preferring to book available profits as the following week would be shortened by one session and also because of the rollover week.

Pakistan Stock Exchange’s KSE-100 shares Index surged 0.74 percent or 277 points to close at 37,608 points. It touched a peak of 38,107 with a low of 37,259 points week-on-week. The benchmark index rallied about 7.52 percent during July to date.

“We expect the market to remain dreary as the upcoming result season is likely to be mostly uneventful with COVID-19 related economic fallout to keep earnings compressed,” Habib Metro-Financial Services said. “Any positive surprises will cheer up moods and invite profit-taking thereby keeping a lid on any potent upside in the near term.”

Daily average volume settled at 413 million shares, down 3 percent when compared with the corresponding week while average value traded clocked in at $97 million, down 2 percent.

Foreign selling continued clocking in at $9.3 million compared to a net sell of $27.4 million last week. Selling was witnessed in commercial banks ($2.9 million) and exploration and production ($1.7 million). On the domestic front, major buying was reported by companies ($7.3 million) and insurance companies ($7 million). Dealers said the rally lost stream midweek amid profit-taking and selling pressure from individuals.

But, the rally built up following the government decision to ban institutions to invest in savings scheme and sharp rate cut of 625 basis points, which convinced investors to park their funds in the equity market as the return percentage has been bit higher.

The central bank made several rate cuts to stem the economy hit by the COVID19, but owing to rollover week, upcoming Eid holidays and lack of positive triggers took steam out from the market.

“After the Eid holidays, there has been possibility that government may soften terms for other sectors too which would help revive confidence of the general investors as economic cycle would speed up some pace, helping the industries to revive,” a dealer said.

Sector-wise positive contributions came from commercial banks (253 points), power generation and distribution (76 points), automobile assembler (31 points), textile composite (28 points), and technology and communication (17 points). Negative contributions came from cements (60 points), oil and gas exploration companies (38 points), and chemical (19 points).

Scrip-wise positive contributions were led by HBL (128 points), MCB (64 points), HUBCO (58 points), BAHL (35 points), and MTL (31 points).