Monetary statement to steer stocks

The Monetary Policy Statement, scheduled for Monday, is seen as a compass for the market next week, provided the IMF’s loan programme doesn't hit any bump in the road, while a rupee rout can also give investors cold feet, traders said.

“Key events to look out for include the monetary policy meeting, scheduled for Monday, August 22, which is likely to dictate the direction of the market, where we expect no change in the interest rates,” said a weekly analysis report of the Air Habib Ltd.

“Keeping in view the ongoing result season, some sectors and scripts are expected to stay in the limelight.”

The brokerage viewed that stability in the rupee-dollar parity was likely to keep the sentiment upbeat.

“We expect the market to be positive in the upcoming week,” the brokerage said in its report.

AKD research expects the policy rate to rise by 50-100bps. “The MPS decision is likely to drive the market’s momentum in the coming week. Furthermore, as the results season continues, all eyes are on the earnings posted by scripts for the previous quarter,” analysts at AKD Research said.

It said the market momentum would highly likely remain positive as the IMF's tranche of $1.2 billion was drawing near.

The currency market was also seen carrying its current trajectory and the rupee may gain further ground against the greenback, it added.

“We highlight technology and refineries to outperform in the short run. Investors are advised to closely track the result announcements and build positions accordingly,” the AKD Research said.

Bulls dominated the market right from the outset of the week on reports of Saudi Arabian plans to renew $3 billion deposits with Pakistan along with the provision of additional support worth $100 million/month in terms of petroleum procurement, which pushed the market above 43,000 level. Furthermore, upbeat LSM growth of 11.7 percent year-on-year in FY22 also gave heart to investors.

Albeit, profit-taking kicked in around midweek, while the announcement of a potential imposition of Rs50 billion new taxes also weakened the market sentiment.

“Overall, we expect the fiscal space to improve in the near future. The week ended with profit-booking and institutional investors started taking positions. We expect the cyclical sectors to perform in the week ahead,” said KASB Securities in an analyst report.

The market closed in the green zone at 43,270 points, up by +413 points or 0.96 percent week-on-week.

Average volumes clocked in at 519 million shares, up by 51 percent, while the average value traded settled at $57 million (up by 18 percent).

Foreign selling clocked in at $2.78 million compared to a net sell of $0.88 million last week. Major selling was witnessed in cement ($3.37 million) and banks ($1.30 million).

On the local front, buying was reported by broker proprietary trading ($7.23 million) followed by the companies ($2.48 million).

Sectors that underpinned the market included banks (164 points), cement (123 points), technology (94 points), power generation and distribution (45 points) and food and personal care products (38 points).

Stocks that threw in major support included HBL (101 points), LUCK (85 points), ENGRO (70 points), MEBL (65 points) and SYS (61 points).

The laggard sectors were energy (-74 points), OMCs (-29 points), and automobile assemblers (-23 points).

Names that dragged the index down included PPL (-45 points), OGDC (-44 points), FFC (-42 points), PSEL (-38 points) and UBL (-29 points).

Analyst Nabeel Haroon at Topline Securities attributed the positive momentum to news that the IMF board meeting was set for August 29 after getting confirmation from bilateral friends such as Saudi Arabia, the UAE, and Qatar for bridging the financing gap of $4 billion.