Earnings to pilot stocks; Covid risks persist

KARACHI: Stocks are seen gathering some momentum from corporate results' cues in the succeeding week; however, a high Covid variant infection rate holds potential to disrupt market dynamics, traders said.

The benchmark KSE-100 Shares Index closed higher by 418 points (0.9 percent) to end at 45,763 points week-on-week.

A report by Arif Habib Ltd said with the commencement of the result season, certain sectors and scrips were expected to come under the limelight, giving the market a push forward.

“Moreover, any update with regards to IMF’s 6th review will have an impact on the market,” the brokerage said adding, “We expect the market to remain positive in the upcoming week”.

The market commenced on a positive note this week but slipped into the red zone given a delay in International Monetary Fund’s (IMF) review.

Average volumes clocked in at 356 million shares, up 12 percent week-on-week, while average traded value settled at $51 million, down 12 percent week-on-week.

Alongside this, a resurgence of higher Covid-19 cases (especially Omicron variant) raised expectations of a potential imposition of restrictions and smart lockdown.

However, the sentiment once again turned positive after the Finance Supplementary Bill 2022 (minibudget) passed the lower house despite strong protest by the opposition, which ended the uncertainty.

Moreover, auto numbers showed a massive 96 percent year-on-year growth for the month of December 2021 and 46 percent month-on-month.

Furthermore, a hike in Arab Light crude oil prices to $86.16/bbl generated activity in the exploration and production sector. Lastly, rupee appreciated to Rs176.07 against dollar.

Foreign funds remained net buyers this week as they bought equities worth $0.53 million compared to a net buy of $24.2 million last week.

Major buying was witnessed in technology ($0.5 million) and power ($0.4 million).

On the local front, mutual funds remained the major seller by offloading $9.9 million worth of equities followed by companies that pulled $2.4 million out of the market.

Sector-wise positive contributions came from commercial banks (328 points), miscellaneous (54 points), chemical (50 points), power generation & distribution (47 points), and oil & gas exploration companies (37 points).

Stock-wise major support arrived were HBL (87 points), MCB (73 points), PSEL (57 points), HUBC (43 points), and COLG (39 points).

Major laggard sectors included cement (67 points), technology & communication (64 points), and fertiliser (26 points).

Stocks that dented the index were SYS (53 points), LUCK (38 points), and ENGRO (33 points).

National Assembly on Thursday passed two bills, the Finance (Supplementary) Bill, 2021 and the State Bank of Pakistan (Amendment Bill), 2021 (reportedly with some amendments in the original bills).

This is part of the process of implementation of prior actions for successful completion of the sixth review of the IMF programme with Pakistan.

Completion of these actions is expected to lead to the approval by the IMF Executive Board of the release of $1 billion to Pakistan until the end of this month.

Other major news in the outgoing week were: PTCL and SCO announced to explore collaborative opportunities, Cnergyico PK announced to acquire 57.37 percent stake in Puma Energy Pakistan, Nepra allowed a cheaper rate of Rs12.96 per unit for K-Electric consumers, World Bank projected a 4 percent GDP growth rate, circular debt touched Rs2.41 trillion mark, and ECC approved Rs100 billion payment to Independent Power Producers.