Upbeat MSCI, FATF prospects likely to keep index positive

The capital market during the outgoing week showed positive performance on higher exports numbers and arrival of Covid-19 vaccines, with expectations that the Finance Action Task Force (FATF) and review of MSCI would keep the bull run going in the coming sessions too, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index remained positive at a 3.5 year high. It went up 1.12 percent or 520 points, to close at 46,906 points in the outgoing week. During first week of the month, the benchmark index remained positive where it touched a high of 47,339 points and a low of 46,188 points.

Tahir Abbas, director research at Arif Habib Limited, said, “We expect the market to continue trading in the green.”

Covid cases have seen a further decline with infection ratios coming down to below 4 percent this week, he said. “Cyclicals are expected to continue being in the limelight while recent rise in oil prices may continue to attract attention in E&P scrips,” Abbas added.

Umair Naseer, from BMA Equity Sales Desk, said moving forward, the market would likely to sustain its positive momentum given the fast pace of global vaccine rollout, stable value of rupee against the greenback, accommodative monetary policy stance, and improving macroeconomic indicators.

“We reiterate banks, E&Ps, fertilisers, autos and cements as our preferred sectors for the current calendar year,” Naseer added.

Muhammad Saeed Khalid, head of research at Shajar Capital, said the index would likely remain above the 47,000 points level mainly on the profitability of the banking industry for CY20 along with the improving sentiments in Mari Petroleum. Among other expected positives, recovering crude oil prices would improve oil industry returns, while the likely announcement of the textile policy might boost investor confidence in this sector.

“We also believe the MSCI review, which is to be scheduled next week will likely induce buy on dip strategy in the market,” Khalid added.

Salman Ahmad, head of institutional sales at Aba Ali Habib, said, “Positive trend in local industrial data strengthened investor’s confidence in the bourse; while on the political front, the situation remained stationary as government-opposition await Senate election date.”

“Furthermore, we believe the ongoing announcement season and the outcome of Pakistan’s case at FATF will set the market’s direction,” Ahmad added.

During the week average volumes clocked in at 554 million shares (down by 18 percent week-on-week), while average value traded settled at $171 million (up by 1.2 percent week-on-week).

Foreign investors sold equities worth $2.7 million compared to a net sell of $9.1 million last week.

Major selling was witnessed in cements ($2 million) and technology and communication ($0.5 million). On the local front, major buying was reported by individuals ($9.5 million and companies ($6.6 million).

Sector-wise positive contributions came from oil and gas exploration companies (334 points), power generation and distribution (101 points), and fertilisers (90 points).

Sectors that contributed negatively include technology and communication (94 points), engineering (59 points) and commercial banks (45 points).

Top scrip-wise contributors were Mari Petroleum (147 points), Oil and Gas Development Company (93 points), and Hubco (78 points), while laggards included TRG (130 points), Habib Bank (46 points), and INIL (38 points).