Stocks seen buoyant amid State Bank status quo bets

Stocks are seen trending upwards on rate hold bets after a semi-turbulent week that saw the index yo-yoing wildly, but somehow managing to hold on to most of gains, owing to a strong interest in cyclicals, autos, refineries, and oil marketers, dealers said.

Pakistan Stock Exchange's (PSX) KSE-100 shares index strengthened 1.21 percent or 508 points to close at 42,531 points, for the third consecutive week the market closed on positive note.

Muhammad Saeed Khalid, head of research at Shajar Capital, said, “In the upcoming week we expect the market to perform mainly on the expected status quo stance of the SBP in the upcoming monetary policy statement”.

“On the correction side, we also believe that in the absence of substantial financial announcements in the next week, the market may see a downside of 1,500 points.”

“We also expect the announcement of detailed trade numbers in the week ahead are likely to give rise to uncertainty over the export-oriented sectors,” Khalid added.

On average, daily volumes and traded value for the outgoing week were up by 1 percent and 2 percent to 750 million shares and $142 million, respectively.

Hammad Aman from KASB Securities sales team said, “We continue to see more interest in autos (after the release of August sales data), oil marketing companies (primarily, tilted towards HASCOL on presumed improved dynamics) and refineries, witnessing profit-taking after sharp run-ups”.

Optimism was expected to prevail next week as the anticipated passage of FATF bills by joint assembly session might bring the feel-good factor back on the screen, Aman added.

Ansreen Malik at BMA Capital Management equity desk said, “Fresh liquidity injections from local and foreign investors amidst soft monetary policy outlook in the near to medium term are expected to instill further optimism in equities”.

“We believe the latest run-up of the benchmark index along with the stable rupee will pique foreign investors’ interest in the blue chip stocks,” she added.

Brokerage Arif Habib Limited said, "The market is expected to remain green due to higher interest of local individuals in the market, improvement on macroeconomic front, continued improvement on the coronavirus front and lower yields in fixed income instruments, rendering equities as the preferred asset class”.

Furthermore, on the other hand, upcoming key event will be announcement of State Bank’s monetary policy statement this month, where the benchmark policy rate was expected to remain unchanged, the brokerage added.

Foreign investors sold equities worth of $4.40 million compared to a net sell of $10.03 million last week.

Major selling was witnessed in oil and gas exploration and production ($1.15 million) and fertilisers ($1.01 million).

On the local front, buying was reported by individuals ($22.84 million) followed by mutual funds ($8.50 million).

For a couple of sessions market came under selling pressure and profit-taking, attributable to falling global equities and crude oil prices. However, negative activity proved short-lived as a stay order on GIDC collection and launch of Roshan Digital Account for overseas Pakistani spurred turned the tide.

Positives, which boosted sentiments, included an improvement in COVID-19 situation, unconfirmed news flows suggesting that PPL has discovered gas reserves of one trillion cubic feet in Kalat.

Contribution to the upside was led by commercial banks (181 points), fertilisers (157 points), cements (70 points), power generation and distribution (61 points), and insurers (53 points).

Scrip-wise major gainers were LUCK (124 points), ENGRO (76 points), HUBC (69 points), MCB (58 points), and FFC (54 points).

Whereas, scrip-wise major losers were OGDC (48 points), MARI (32 points) COLG (28 points), PIOC (24 points), and MLCF (22 points).