Stocks seen upward sticky as lockdown slapped

Stocks may remain in retreat as Covid variants are making advances in Pakistan, forcing authorities to resort to full-scale lockdowns halting economic activities, traders said.

The KSE-100 Shares Index declined 1.54 percent or by 738 points percent week-on-week to settle at 47,055.29 points.

Brokerage Arif Habib Limited, in a note said Karachi would be under a more stringent lockdown next week imposed to contain the highly contagious Delta variant of the novel coronavirus and as a result the market was likely to remain upward sticky in the short term.

“Albeit, with the result season commencing and cyclicals expected to post a robust jump in earnings despite a nationwide lockdown in second quarter last year, certain select stocks may come under limelight,” it reported.

Pakistan Stock Exchange’s benchmark KSE-100 Shares Index remained under pressure for the most part of the week, closing in red on 4 out of 5 sessions.

The key sentiment dampener was a steep rise in the domestic Covid infection ratio with businesses asked to operate at 50 percent workforce.

With no letup on the Covid infection front, the Sindh government announced a complete lockdown in Karachi for the week ending August 8, 2021, causing the equities to book further losses on Friday.

Although investors heaved a sigh of relief in a week after the central bank held its benchmark policy rate at 7 percent, spurring buying in cement and steel scrips.

For the outgoing week, average daily volumes and traded value were up 28 percent and 14 percent to 405 million shares and $81 million, respectively.

Foreigners offloaded stocks worth $5.4 million compared to a net sell of $21.02 million last week. Major selling was witnessed in commercial banks ($2.94 million) and all other sectors ($2.56 million).

On the local front, buying was reported by banks ($6.30 million) followed by mutual funds ($2.43 million).

Contribution to the downside was led by cements (212 points), commercial banks (178 points), oil and gas exploration companies (58 points), pharmaceuticals (53 points), and oil and gas marketing companies (51 points). Scrip-wise major losers were LUCK (118 points), TRG (62 points), MCB (60 points), PSO (45 points), and HBL (44 points). Whereas, scrip-wise major gainers were SYS (67 points), FCEPL (43 points), HUBC (38 points), ANL (34 points) and MTL (21 points).

During the week government ramped up efforts to retain IMF programme, car loans hit a record high of Rs308 billion in FY21, State Bank of Pakistan kept interest rate unchanged at 7 percent, Rs352 billion Unlisted Stimulus Package was announced to procure vaccine, Honda City's 6th generation model was officially launched in Pakistan with a price starting from Rs2.599 million.

During the month of July CPI for the month of June 2021 clocked in at 9.7 percent, June cement dispatches reached 5.211 million tons, up by 13 percent year-on-year, Pakistan raised $1 billion in the international bond market after reopening of existing three-tranche bonds launched in March, a deal that raised $2.5 billion, remittances for June hit $2.69 billion, up 8 percent month-on-month and 9 percent year-on-year, LSM output for May 2021 increased 36.84 percent.

Furthermore, net foreign direct investment in June came in at $135.4 million, down 32 percent month-on-month and 23 percent year-on-year, while current account deficit for June yawned to $1.644 million against $650 million in May 2021.