Stocks see slight correction after 10-week bull run, outlook positive

KARACHI: Stocks closed slightly negative during the outgoing week amid institutional profit-taking after a positive streak of 10 weeks while the market is expected to remain in the positive momentum during the upcoming week, traders said.

“We anticipate a sustained positive momentum in the forthcoming week,” said brokerage Arif Habib Ltd. “We also observe that stocks persist in trading at enticing valuations, potentially as an additional attraction for investors.”

The brokerage said a roller coaster ride was witnessed in the stock market during the week. The highlight of the week was the policy rate, which was kept at the same level by the monetary policy committee (MPC), which was in line with the market expectations.

Moreover, there was a T-bill auction, in which there was no significant change in the cut-offs across all the tenors. Furthermore, Fitch opted to keep Pakistan's Long-Term Foreign-Currency Issuer Default Rating unchanged at 'CCC’, despite favorable economic signs, like the strengthening of the local currency and the continuation of a Stand-by Arrangement with the IMF. Pakistan Auto Sales number (including Non-PAMA members) for November clocking in at 7,700 units (up by 6 percent month-on-month).

In addition, the industrial output witnessed a fall of 4.1 percent year on year during October 2023 (-2.0 percent month-on-month). Additionally, SBP’s reserves surged by $21 million, reaching $7 billion. During the week rupee closed at 283.26 against the greenback, appreciating by 0.22 percent week-on-week.

Overall, the market closed at 66,130 points, declining by 94 points or 0.14 percent week-on-week. Average volumes arrived at 1,253 million shares (up by 22 percent week-on-week) while the average value traded settled at $107 million (down 10 percent week-on-week).

Foreigner buying continued during this week, clocking in at $13.1 million compared to a net buy of $9.6 million last week. Major buying was witnessed in all other sectors ($3.1 million) and cement ($3.0 million). On the local front, selling was reported by insurance companies ($5.65 million) followed by broker proprietary ($3.71 million).

Sector-wise negative contributions came from commercial banks (642 points), food & personal care (71 points), miscellaneous (54 points), textile composite (47 points) and leather & tanneries (35 points). Scrip-wise negative contributors were MEBL (219 points), UBL (173 points), BAHL (114 points), HUBC (91 points), and HBL (84 points).

Meanwhile, the sectors which mainly contributed positively were oil and gas exploration companies (363 points), and fertilizer (301 points). The scrip-wise positive contributions came from PPL (251 points), FFC (87 points), PTC (78 points), SNGP (78 points), and BOP (78 points).

Analyst Nabeel Haroon at Topline Securities said the benchmark Index closed slightly negative on week on weekly basis, putting an end to a 10-week positive weekly closing streak.

"This can be attributed to profit-taking by investors and some concern for upcoming election being held on time on the back of news flow in the mainstream media during the week."

Analyst Shagufta Irshad at JS Research said contrary to a decline in the index points, there was an increase in the traded shares, which was primarily led by fresh inflows from retailer investors and mutual funds, countering intra-day corrections during the week.

The energy sector remained in the limelight, with positive news flow regarding discoveries, constructive measures taken to reduce the build-up of fresh stock of circular debt, ECC approval for special incentives for one of the OGDC-operated fields (Jhal Maghsi), and the noteworthy OMC M&A deal with Saudi's Aramco acquiring stake in Go Pakistan.