Stocks seen upbeat on firm fundamentals

Stocks saw a multi-trend week that ended strong over the last, mainly owing to government’s move to procure virus vaccine early next year and some solid economic numbers, while they are mostly seen upbeat going ahead as fundamentals are firmly in the favour of growth.

Pakistan Stock Exchange’s (PSX) KSE-100 index witnessed all bullish trading sessions during the week, where it cumulatively surged 3.4 percent or 1,399.91 points during the outgoing week to conclude at 42,207 points week-on-week (WoW).

Salman Ahmad, head of institutional sales at Aba Ali Habib said, investors’ confidence was further cemented on improved export numbers and government’s initiative to do away with peak/off-peak tariffs mechanism to support

SME (small and medium enterprises) and export-oriented businesses.

Positive sentiments prevailed across all heavyweight sectors on improved oil sales and revision

in cement/steel prices, Ahmad added.

An analyst from BMA Capital Management said considering the stable value of the rupee against the greenback and improving macroeconomic indicators, “we expect the market to remain upbeat in the coming week”.

However, it should take some time for the second wave of COVID-19 to clear up and the vaccine dissemination to the masses, he said.

Furthermore, key highlights for next week include SBP’s remittance numbers and PIB fixed rate auction, the analyst added.

During the week, volumes clocked in at 440 million shares, up 55, compared with preceding week's turnover.

The average traded value also increased to $113 million, up 66 percent, on week-on-week basis.

Foreign investors sold equities worth $30 million.

During the outgoing week foreigners, companies and banks net sold equities worth $30.02 million, $7.11 million and $4.74 million respectively, whereas individuals, brokers, insurance and mutual funds on net basis purchased $20.78 million, $8.07 million, $7.79 million and $5.37 million respectively.

Last week’s bull-run sustained momentum on strong investor sentiments, led by rising international oil prices, positive developments on vaccine front, and increased demand of cement and steel.

On the other hand, coronavirus cases continued to surge at a high pace, where 7-day moving average of infection ratio crossed 7.34 percent (134-day high), whereas active cases crossed 51,000 mark, up 10 percent on weekly basis. So far, Britain has become the first country in the world to approve COVID-19 vaccine.

Meanwhile, some other western countries are also in the process of approving vaccine and more vaccines means less cases and fewer economic restrictions.

On the economic front, Pakistan and ADB inked $300 million loan agreement to support macroeconomic stability. Moreover, SBP's foreign exchange reserves decreased $305 million during the last week owing to external debt servicing. November inflation clocked in at 8.3 percent because of a slight decline in the prices of perishable products.

The sectors which lifted the index during the week were PSMC (17.2 percent), TRG (16.9 percent), ATRL (16.4 percent), INIL (12.3 percent), and AGIL (12.2 percent), whereas laggards were, GATI (15.3 percent), STJT (7.5 percent), JLICL (3.7 percent), SCBPL (2.5 percent), and HMM (1.8 percent).