Surefooted stocks to eye IMF cues

Stocks ended a roller-coaster week with more gains reacting to a major headway made on the IMF front, which may also keep the market on the upside in the coming sessions, traders said.

The market closed at 42,858 points, gaining 761 points (up by 1.8 percent) week-on-week.

“With the expectation of disbursement of loan from IMF, contingent upon the approval from the Fund’s Executive Board, the investor sentiment is expected to remain positive,” Arif Habib Ltd, a brokerage, said in a weekly market report.

“Furthermore, with the ongoing result season, certain sectors and scrips are likely to remain in the limelight in anticipation of strong results.”

The three-day week commenced on a positive note amid optimism over the disbursement of IMF loans in the coming weeks, which will further bring in loans and investments from friendly countries and international financial institutions.

Faisal Irfan at JS Research said the continued appreciation of the rupee against the dollar, a decline in Pakistan international bond yields, and positive development on

the IMF front led to the market rally this week.

The country got one step closer to reviving the stalled IMF programme as a Letter of Intent (LOI) was received from the lender. These positive developments led to further rupee appreciation of 4.1 percent against dollar, fueling positive investor sentiment. On the flip side, forex reserves declined by $555 million during the week because of debt servicing.

Average volumes clocked in at 343 million shares (up by 31 percent week-on-week) while average value traded settled at $48 million (up 41 percent week-on-week).

Foreign selling clocked in at $0.9 million compared to a net sell of $0.7 million last week. Major selling was witnessed in banks ($1.6 million) and cement ($1.3 million). On the local front, buying was reported by individuals ($5.1 million) followed by other organizations ($0.4 million).

Sector-wise positive contributions came from banks (224 points), E&Ps (205 points), power (84 points), automobile assemblers (55 points), and OMCs (53 points).

Stock-wise positive contributors were OGDC (79 points), PPL (69 points), MEBL (67 points), POL (56 points) and HUBC (52 points).

Sectors which contributed negatively were cement (23 points) and tobacco (15 points).

Meanwhile, scrip-wise negative contributions came from PSEL (63 points), NESTLE (17 points), EPCL (16 points) and PAKT (15 points).

Nabeel Haroon at Topline Securities said the positive flow at the PSX can be credited to the news flow suggesting a revival of the IMF programme was in the final stages, a decline in crude oil prices (easing concern on external accounts) and further recovery in rupee value against USD.

He said that increased participation was observed by investors as average daily traded volume and value increased 28 percent and 36 percent on a week-on-week basis to 343 million shares and Rs10.6 billion respectively.

On flows’ end during the week, mutual funds, foreign corporate, banks and insurances remained net sellers, while this selling was absorbed by individuals and companies.

On the news front, the finance minister announced that special tax on the basis of lower ADR won't be applicable on banks on a retrospective basis, Urea/DAP offtake is expected to decline 37 percent/65 percent on a year-on-year basis during July, and PSO received Rs62 billion for confirmation of LCs of petroleum products.