After five uninterrupted weeks of closing in the green, the Pakistan Stock Exchange (PSX) succumbed to selling pressure in the outgoing week and closed with a loss of 66 points or 0.14% to settle at 48,238.67 points.
“It appears investors opted to book-profit in the rally that followed the announcement of the federal budget for fiscal year 2021-22,” said JS Global analyst Amreen Soorani.
The week kicked off on a bullish note as widespread uncertainty, which had enveloped the market before budget announcement, vanished gradually and a clear economic picture emerged. Market players took fresh positions on back of encouraging large-scale manufacturing (LSM) output data and reduction in capital gains tax (CGT) on sales of shares at the bourse.
Unfortunately, tables turned on Tuesday as budget optimism faded and investors resorted to offloading their stockholdings owing to absence of positive triggers.
Upcoming Financial Action Task Force (FATF) meeting on Pakistan’s status scheduled later this month and fear of a spike in input costs of industries following persistent depreciation of the rupee against the US dollar kept the bourse under pressure in the next two sessions.
Upbeat car sales data, which showed a triple-digit growth of 247% in May 2021, also failed to entice market participants.
The trend reversed on Friday and bulls managed to take charge. However, buying was limited with investor confidence remaining weak ahead of the FATF meeting and approval of budget proposals for the next fiscal year.
Overall, the activity remained volatile during the outgoing week.
“Going forward, we expect the market to regain positive momentum in the coming week. With FATF’s plenary session to be held on June 21, 2021 the index is expected to bounce back as an exit from the grey list seems imminent,” stated an AHL report.
Average daily traded volume dropped 3% week-on-week to 1.04 million shares while average daily traded value increased 6% week-on-week to settle at $170 million.
In terms of sectors, negative contributions came from commercial banks (176 points) fertiliser (88 points), food and personal care products (52 points), automobile assembler (34 points) and miscellaneous (31 points).
Meanwhile, the sectors that contributed positively included oil and gas exploration companies (156 points), cement (74 points), power generation and distribution (31 points), engineering (30 points) and tobacco (25 points).
Scrip-wise, negative contributors were HBL (88 points), Unity Foods (56 points), TRG Pakistan (47 points), UBL (40 points), and Engro Fertiliser (34 points). On the contrary, positive contributors were Oil and Gas Development Company (99 points), Pakistan Oilfields (64 points), Hubco (46 points), Lucky Cement (36 points) and Systems Limited (28 points).
Foreign selling was witnessed this week arriving at $6.8 million against a net buy of $7.5 million last week. Selling was witnessed in commercial banks ($2.5 million) and technology ($2.5 million). On the domestic front, major buying was reported by individuals ($21.4 million) and mutual funds ($10.9 million).
Among other major news of the week; State Bank capped feeless interbank fund transfer at Rs25,000 per month, car sales registered a rise of 62% during July-May FY21, large-scale manufacturing posted a staggering 68% year-on-year rise and SBP foreign exchange reserves rose $2 million during the week.
Published in The Express Tribune, June 20h, 2021.
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