The benchmark index of Pakistan Stock Exchange (PSX) closed the week ending on 4th February 2021 at 46,906 points, up 1.12%WoW amid volatile sessions, with heavyweight E&P sector supporting the index, but profit taking was witnessed in select scrips. E&P sector turned out to be the top performer during the week on rising oil prices and removal of dividend distribution cap on MARI.
Average daily trading volume for the week declined to 675.4 million shares, from 932.5 million shares a week ago. The key news driving the market included: 1) Pakistan beginning vaccination drive with first batch of 500,000 doses of Sinopharm vaccine arriving and AGP Pakistan securing Emergency Use Authorization (EUA) from DRAP for Sputnik V (COVID-19 vaccine), to be imported from Russia, 2) January 2021 inflation was contained at 5.7%YoY as compared to an increase of 8.0% in December 2020 and 14.6% in January last year, 3) local cement sales registering growth of 17%YoY to 27.65 million tons during 7MFY21 on the back of robust construction demand and 4) GoP announcing primary surplus of 0.7% of GDP during 1HFY21, similar to same period last year.
Apart from E&P, Power and OMCs amongst the main board items gained 3.1%WoW and 2.5%WoW respectively, on developments relating to clearance of circular debt. Amongst secondary boards, Textile spinning gained 4.6%WoW on expectation of stronger results due to better margins on yarn in 2QFY21, followed by Leather (up 4.1%WoW) and Paper & Board (up 3.1%WoW). Foreigners emerged the net seller during the week (US$2.73 million net outflow) together with Mutual funds (net sell of US$1.96 million), which was mainly absorbed by Individuals (net buy of US$9.5 million) and Companies (net buy of US$6.57 million). Top performers during the week included: GATM, MARI, PSMC, GSKCH, and CHCC, whereas laggards were: GHCL, HASCOL, GATI and INIL.
Market is expected to maintain positive momentum in the near term especially on account of successful vaccination drive, settlement of IPPs dues, and earnings season (Key result announcements in the upcoming week include NPL, EPCL, MCB, CHCC, and ASTL). That said, some profit taking could be seen in selected scrips in the coming week where key developments to watch out for in the near term is the upcoming FATF Review by end of the month.