Weekly review: KSE-100 advances as lockdown eases

Index rises 419 points as investors remain cautious ahead of budget announcement

KARACHI: The Pakistan stock market witnessed yet another lacklustre week as the government lifted lockdown while cases of the coronavirus in the country continued to soar. The KSE-100 index rose 419 points or 1.2% to end at 34,450 level.

The rally from the preceding two weeks failed to sustain as the market took a breather amid growing selling pressure.

“One theme visible during the week was budget related news and proposals for various sectors, which as always, had an effect on market sentiment,” stated a report from Arif Habib Limited.

The market opened on a positive note this week with investors welcoming further ease in lockdown and opening up of several businesses with Standard Operating Procedures (SOPs) in place. Moreover, rising global oil prices coupled with a revival of international economic activity kept the exploration and production scrips under limelight. A low inflation reading of 8.2% for the month of May also encouraged investors to make fresh investments.

In addition, a decline in profit rates by the Central Directorate of National Savings further fueled the rally. For the third time this year, the government slashed profit rates on national saving schemes by 200 basis points to 6.5%.

Following two sessions in the green, the stock market reversed its trend on Wednesday as investor optimism faded and the index retreated to the red zone. During the next two sessions, profit-taking was witnessed at the bourse as investors weighed sentiments on continuous faltering of rupee value against the US dollar.

Moreover, PIB yields witnessed a notable rise in the auction, which dashed hopes of a further cut in the interest rate. Uncertainty over the upcoming budget loomed throughout the week with mixed news flows which influenced the direction of the market.

The KSE-100 index managed to post gains during the last trading session of the week after the proposal of Annual Plan Coordination Committee to enhance development spending to Rs1.3 trillion in the next fiscal year revived investor confidence.

“With federal budget announcement scheduled for June 12, 2020, the market is expected to track budget related news flow,” stated the AHL report.

Participation remained low as average volumes dropped 27% week-on-week to settle at 157 million shares while average value traded also fell 27% to clock-in at $39 million.

In terms of sectors, positive contributions came from commercial banks (401 points), oil and gas exploration companies (78 points), automobile parts and accessories (32 points), textile composite (25 points) and pharmaceuticals (19 points).

However, negative contribution was led by fertiliser (53 points), power generation and distribution (30 points) and insurance (25 points) stocks.

Scrip-wise, MCB (110 points), UBL (100 points), Pakistan Oilfields (66 points), HBL (66 points) and Bank AL Habib (54 points) helped the index advance higher.

Foreign selling continued this week and clocked-in at $15.3 million compared to a net sell of $2.4 million last week. Selling was witnessed in commercial banks ($5 million) and textile composite ($4.4 million). On the domestic front, major buying was reported by companies ($7.4 million) and mutual funds ($6.6 million).

Among major news of the week was; import of Euro-V compliant diesel and petrol products was approved and Rs200 billion were disbursed amongst power entities. 

Published in The Express Tribune, June 7^th, 2020.

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