Stocks seen sluggish yet result-sensitive amid volatility

Stocks spiraled downward during the week with foreign funds and local financial institutions leading the sell-off, though trade is likely to be mostly choppy henceforth, upcoming results may trigger select buying, dealers said.

After posting a gain of 18.7 percent in seven consecutive weeks, Pakistan Stock Exchange's KSE-100 shares Index succumbed to profit-taking, shedding 1.6 percent or 669 points to close at 39,621 points.

The selling spree unnerved the individual investors, who remained indifferent to positive developments like a tremendous growth in remittances and government plans to sell shares in oil and exploration companies to reduce fiscal deficit.

Muhammad Saeed Khalid, head of research Shajar Capital, said, “In the last week the market was volatile mainly on the higher than expected NCPI (National Consumer Price Index) numbers along with the lower than expected cement and fertiliser sales numbers”.

“We expect the benchmark index to remain sluggish mainly due to Ashura. On the positive side, we presume the upcoming financial results of different corporates may likely revive positivity in the market to mark higher month-on-month returns in August,” Khalid said.

The index touched a peak of 40,435 points, with a low of 39,240 points showing a volatility of 1,195 points.

Average volumes settled at 441 million shares down by a 24 percent, while average traded value clocked in at $107 million, down by 15 percent compared with the preceding week.

Brokerage Arif Habib Limited said, “Although profit-taking at the index was due, materialisation of certain decisions recently (GIDC judgment and MoUs signed with IPPs) exacerbated the market performance”.

“With that being said, Pakistan continues to fare better amongst regional and world markets on the COVID-19 front, while positive economic developments such as augmenting remittances, growing forex reserves, stable currency, and revival in cyclical demand (cement, steel and automobile) also paints a positive picture for the country,” the brokerage added.

Brokerage BMA Capital Management in a report said, “In the near term, we expect E&P and banking sector to perform better than other sectors”.

Any dip in the market should be considered as an opportunity to accumulate fundamentally strong scrips, the brokerage added.

In the outgoing week foreigners sold off equities worth $4 million compared to net-buying of $8.7 million last week.