PSX likely to see sharp swings amid select selloff

Stocks had a flat week where trade-aversion and profit-taking went hand in hand, owing to FATF angst and monetary policy suspense, while sharp swings are seen ahead amid likely offloading by funds, dealers said.

Pakistan Stock Exchange's (PSX) KSE-100 shares index edged 0.1 percent or 26 points lower to close at 42,505 points level.

Muhammad Saeed Khalid, head of research at Shjar Capital, said, “In the week ahead, we believe the market to remain volatile mainly on the expected selling by the Mutual Funds in order to make capital gains for the 1QFY21”.

"We also believe the economic numbers in the week ahead may likely reduce negativity further over the ‘balance of payment’ side, which may be a positive factor for the market to remain in the 42,000 points range,” Khalid said.

Umair Naseer, from equity sales desk at BMA Capital Management said, “The monetary policy announcement would keep investors upbeat”.

“That said, we maintain our status-quo view on the policy rate.”

Naseer further said commentary from FATF session would likely drive sentiments in the upcoming week; however, rollover week might keep a tight lid on the index performance.

“We continue to prefer banks,” he added.

Average volumes settled at 537 million shares, down 28 percent on week-on-week basis, whereas average traded value clocked in at 93 million dollars, a decline of 35 percent.

Brokerage Arif Habib Limited in a report said, “SBP’s Monetary Policy Committee (MPC) is expected to maintain a status quo stance, we expect the announcement on Monday to be a non-event for the market”.

Foreign investors sold equities worth $1.69 million compared to a net selloff of $4.40 million last week.

Major selling was witnessed in commercial banks ($2.41 million) and food and personal care products ($2.32 million).

On the local front, buying was reported by insurance companies ($10.56 million) followed by mutual funds ($3.56 million).

The events that mainly kept the market in the selling zone were mainly uncertainty on the political front along with the passing of FATF-related bills in the Senate, doubts over the GIDC and IPPs re-agreement with the government.

Despite, improved economic sentiments, surge in remittance, improvement in LSM, and healthy Foreign Direct Investment FDI numbers, the sluggish activity persisted in the market.

Additionally, MoUs between Pakistan and China along with the China’s confidence that Pakistan was likely to exit the FATF grey list could not influence any recovery in the benchmark KSE-100 index.

Further, despite the announcement of Roshan Digital Accounts in the outgoing week, investors remained net sellers mainly on the opposition’s stance on the FATF-related bills and below-expectation financial results.

Sector-wise negative contributions came from insurance (47 points), commercial banks (38 points), power generation and distribution (37 points), tobacco (28 points), and textile composite (25 points).

Whereas positive sectoral contributions were led by E&P (61 points), chemical (25 points), and food and personal care products (21 points).

Scrip-wise main laggards were: TRG (27 points), PPL (26 points), PAKT (25 points), KAPCO (25 points), and HBL (24 points).