Stocks to track results amid virus risks

Stocks are likely to look sharp wagering on loaded earnings especially in cyclical; however, a delta variant spike might dash investor morale, traders said.

“Next week, the market is expected to continue the momentum it gained this week,” said a report of Arif Habib Limited, a brokerage house.

The benchmark KSE-100 Shares Index closed the week at 47,834 points, up 271 points week-on-week.

“We highlight cyclical sectors to be in the limelight due to healthy earnings expected in the upcoming result season.”

However, the report cautioned that the Covid fourth wave would remain a cause of concern and may keep sentiment jittery.

Average volumes clocked in at 467 million shares, down 4 percent week-on-week, while average traded value was recorded at $96 million, down 10 percent week-on-week.

During the outgoing week, foreign buying reached $4.6 million against a net sell of $5.2 million last week. Buying was witnessed in Cements ($1.32 million), exploration and production ($1.30 million) and technology and communication ($1.30 million).

On the domestic front, major selling was reported by individuals ($9.98 million) and Broker Proprietary Trading ($6.32 million).

The KSE-100 is currently trading at a PER of 6.8x (2021) compared to Asia Pac regional average of 16.3x while offering a dividend yield of 6.6 percent versus 2.3 percent offered by the region.

The outgoing week saw the index gaining some momentum in spite of a continued rise in Covid cases on account of the delta variant. The last seven days have seen an average of around 2,000 cases per day compared to 1,400 cases for the seven days preceding that.

Sector-wise positive contributions came from commercial banks (82 points), technology and communication (75 points), cement (46 points), textile composite (36 points) and investment banks/investment companies/securities companies (36points). Scrip-wise positive contributors were SYS (79 points), LUCK (62 points), PSX (36 points), UNITY (33 points), and BAFL (30 points).

Meanwhile, the sectors that contributed negatively include fertiliser (36 points), power generation and distribution (17 points), pharmaceuticals (13 points), oil and gas exploration companies (12 points) and automobile parts and accessories (7 points). Scrip-wise negative contributions came from POL (15 points), EFERT (15 points), KAPCO (11 points), CHCC (11 points), and ENGRO (10 points).

“PM Imran Khan’s active step to built and cement relations with Uzbekistan is a great, sincere and appreciable move. For the active economic growth and lifting our people out of poverty, strong trade and economic relations with Central Asian Countries will be beneficial and win-win for Pakistan,” said Ateeq Ur Rehman, an economic and financial analyst.

Rehman said Pakistan’s present export was nearly $25 billion which could jump to $80 billion having successful exports of seafood, dairy, livestock, fruits, vegetables, textile, hosiery, garments, children ware and above all, the pharmaceuticals products.

“Simultaneously it will be a straight jump of revenue too, which is badly needed to cover the non-ending and growing fiscal and trade deficit, while it will also straighten current account and eradicate the balance of payment crisis,” he said.

The outgoing week also saw the release of power generation data, which posted the highest ever generation of 130,223 GW. Other important developments included receipt of $1 billion from Eurobond issuance helping reserves cross the highest level ever of more than $25 billion.