Weak sentiment coupled with geopolitical tensions in the region and uncertainty over talks with IMF continued to dampen investors’ confidence. Thursday session which saw massive buying by Mutual Funds, to the tune of US$12.7 million, helped the benchmark index to break the losing streak. However, the index could not sustain that level and closed in red in the following session by cumulatively losing 123 points (down 0.26%WoW) to close the week at 47,563 points.
The withdrawal of US troops from Afghanistan is creating a vacuum in a high foreign stake region. Added to this was uncertainty over IMF stance on structural reforms regarding tax and energy sector. In light of increase in COVID-19 delta variant and poor compliance of SOPs, NCOC has hinted towards a possible partial lockdown in the cities, further putting the investors on their toes. Participation during the week remained dull with average daily traded volume declining to 485.9 million shares, from 621.9 million shares recorded a week ago. Sector-wise, both Cement and Steel manufacturer increased local prices of cement bags and rebars amid soaring coal and scrap prices.
Major news flow during the week included: 1) NYSE-listed ETF offers exposure to Pakistani stocks which included four firms Systems Limited, Meezan Bank, Lucky Cement and Searle, 2) Overseas Pakistanis remitted US$1.6 billion through RDAs, 3) Pakistan’s public debt rose by 8.23% to Rs2.89 trillion in 11 months of current financial year, 4) Pakistan sold US$1 billion on Tuesday in a reopening of existing three-tranche bonds launched in March this year, a deal that raised US$2.5 billion, 5) GoP raised Rs146.4 billion via fixed rate PIBs’ auction, and 6) Power Division informed Senate panel that the circular debt had increased by Rs260 billion this year.
Top performers of the market included AGP, SCBPL, GATI, HBL and HCAR. Meanwhile laggards included: PAKT, HMM, KAPCO, STJT and ANL.
Flow wise, Companies remained the major buyers with (net buy of US$4.14 million) followed by Mutual Funds (net buy of US$3.91 million), while Broker Proprietary Trading witnessed net sell of US$4.01 million, followed by Insurance Companies (net sell of US$2.79 million).
The market will remained focus on the upcoming results. Analysts expect margin suppression for cyclical plays on the back of increased raw material costs. However, surprises could arise from players maintaining large and low cost inventories. Auto assemblers and Auto part manufacturers are also expected to continue garnering investors’ interest with the recently announced incentives in auto policy. Construction and allied sectors, select Oil and Marketing Companies and Textiles are likely to perform well in anticipation of result season.