Benchmark Index of Pakistan Stock Exchange slips 2.35%WoW

Weak corporate results and State Bank of Pakistan (SBP) decision to leave interest rate unchanged marred investors’ sentiment. As a result the benchmark index of Pakistan Stock Exchange (PSX) closed the week ended 31st January 2020 at 41,631 points, down 2.35%WoW. Market participation also remained weak, with an average daily volume remaining flattish on WoW at 188.14 million shares. The top volume leaders included: MLCF, HASCOL, UNITY, AVN and BOP. While top gainers were: HASCOL, PSMC, NCL and INDU, laggards were: MCB, NML, UBL, POL, PPL and OGDC.

Sector wise, E&P stocks were down 4.7%WoW on declining oil prices and announcement of partial sale of shares of OGDC and PPL owned by the Government of Pakistan (GoP). Cement scrips also remained under pressure on pricing concerns following addition of new capacities and failure of the manufacturers to reach a consensus on pricing.

Other major news flows impacting the market during the week included: 1) the GoP notifying reduction in GIDC to Rs5.00/bag, from Rs405/bag, 2) the ECC deferring proposal of gas price hike (up to 15%), while proposing changes to minimize the burden on domestic consumers, 3) SBP raising Rs590 billion through treasury bills auction, while maintaining cut-off yields for 3M/6M/12M bills at 13.43%/13.29%/13.13%, and 4) FX reserves held by the SBP increasing by US$184 million to US$11.91 billion during the week ended 24th January 2020.

With result season in full swing, near term market performance will largely be driven by earning surprises. MCB, EPCL, ABL and MFL are some of the major players scheduled to announce their earnings next week. From a macro perspective, the market will be keenly watching developments pertaining to the second IMF review under EFF, inflation reading for January 2020, and tax collection by FBR. It is feared that tax collection for the month of January 2020 may fall short by Rs100 billion.

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