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February 28, 2021

Stocks seen out of woods down the line


February 28, 2021

Stocks remained on the ropes during the rollover week, but are seen fighting back in the absence of any major downers down the line, dealers said.

Week-on-week, the benchmark KSE-100 shares index lost 0.79 percent or 362.63 points to close at 45,865.02 points at Pakistan Stock Exchange (PSX).

“We expect the market to remain positive in the upcoming weeks as clouds of FATF-led uncertainty have dispersed and with only three action plans to be addressed, the likelihood of Pakistan exiting the grey list in June 2021 are very bright,” a report issued by Arif Habib Limited noted.

“Moreover, ceasefire across the (LoC) line of control with India is a massive feat achieved on the political front and will further aid stability in the regional climate,” the report added. KSE-30 shares shed gained 0.29 percent or 57.56 points to end the week at 19,173.08 points.

Ahmed Lakhani at JS Global Capital said a correction was on the cards, given the week coincided with the futures' rollover, adding, nonetheless, activity retained its buoyancy of recent weeks with impetus from the quick flow of incoming corporate results.

Another event that had a bearing on investor sentiment during the week was the global anti terror-financing and money-laundering watchdog’s review, which decided to keep Pakistan on the grey list until the next review, Lakhani added.

Moreover the market was also closely watching Pakistan-IMF discussions on options to either increase the size of the remaining tranches or extend the time frame of the Extended Fund Facility (EFF) beyond 2022.

Foreign buying during the outgoing week clocked in at $0.3 million compared to a net sell of $0.6 million last week.

Buying was witnessed in cement ($2.6 million) and technology/communication sectors ($2.2 million). On the domestic front, major selling was reported by broker proprietary trading and mutual funds, draining out a cumulative of $15.6 million during the week.

Average daily volumes declined 1.0 percent to 589 million shares per day, while average value of the traded securities surged 0.01 percent to $159 million shares a day.

The SPI (Sensitive Price Index) inflation increased 0.55 percent during the week. For January, net FDI (foreign direct investment) was reported to decline 12 percent to $192.7 million and current account deficit to $229 million. The NCOC also decided to lift some COVID-related restrictions in the outgoing week.

Sector-wise negative contributions came from oil & gas exploration companies (-107 points), commercial banks (-105 points), and oil and gas marketing companies (-78 points).

Among positive contributors were cement (+119 points), technology (+53 points) and textile weaving (7 points).

In the week under review Oil and Gas Development Company shed 92 points, Pakistan State Oil 42 points, and National Bank lost 41 points.

On the other hand, Lucky Cement added 160 points, TRG Pakistan 56 points, and Meezan Bank strengthened the index by 28 points.

The KSE-100 index is currently trading at a PER of 7.2x (2021) compared to Asia Pac regional average of 17.1x, offering a discount of 6.8 percent compared to 2.5 percent offered by the region.