Pakistan Stock Exchange benchmark index down 0.74%WoW

The week ended on 24th December 2020, the rollover week started on a negative note on declining crude oil prices and concerns regarding a potentially more dangerous strain of COVID-19 coupled with increased border tensions. However towards mid of the week, market went into a positive on the back of another current account surplus for November 2020 as well as slight improvement in oil prices.

The benchmark index closed the week at 43,417 points, down 0.74%WoW. Oil and gas exploration and refineries were among the major laggards due to declining oil prices. As against this, Cement sector was among the leaders as investors cheered healthy local cement demand despite winter season. Top performers during the week included GHGL, CHCC, HMM, PIOC and INIL, whereas laggards were: ANL, AGIL, ATRL, MEBL and PPL.

Average daily trading volumes declined to 507 million shares, from 550 million shares in the earlier week. Foreign outflow were recorded at US$23.3 million, but was absorbed by Companies and Mutual Funds with US$24.8 million and US$1.5 million inflows during the week.

Major news flow affecting the market during the week included, 1) Pakistan’s textile exports registering an increase of 9.27%YoY to US$1.3 billion in November 2020 as compared to US$1.18 billion in corresponding month of last year, 2) Government successfully concluding negotiations with 21 creditor countries for debt suspension amounting to US$1.7 billion, 3) Government considering a proposal to increase the margins of the Oil Marketing Companies (OMCs) and dealers on high-speed diesel (HSD) and petrol, 4) Pakistan and the IMF inching towards formal revival of the stalled Fund program, as the government decided to hike power tariff by 25-30%, and 5) The Federal Cabinet granting massive tax exemptions to facilitate promotion of four-wheeler electric vehicles (EVs) in the country.

Developments on the IMF program (timing and scale of measures would be of utmost importance), COVID-19 situation in the country and global crude oil price movements are likely to sway the market sentiments, going forward. Resurgence in energy prices remain double edged sword, where interest in energy chain and banking sector likely to continue.

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