Stocks to maintain momentum on strong sentiments

Stocks made strides around the turn of the year on developments like extension in construction sector package and reports of a nearly done official deal to cut down the massive circular debt, and are seen staying the course in the coming days, dealers said.

Week-on-week, Pakistan Stock Exchange's (PSX) KSE-100 shares index hit a 31-month high, up 2.3 percent or 1,018 points to close at a level of 44,434 points.

Muhammad Saeed Khalid, head of research at Shajar Capital, said, “We believe the renewal of trading activities, post New Year and Christmas Holiday seasons, will likely improve foreign flow into the PSX”.

Furthermore, implication of tax extensions for construction and engineering sectors along with the expected arrival of PM Imran Khan in Karachi were likely to increase investment sentiments in steel, cements, IT and textile sectors,” Khalid added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said positive development on government’s plan to settle the circular debt of Independent Power Producers, ease in December 2020 inflation numbers and growth in exports helped index cross 44,000 points level.

The new Covid-19 strain that emerged in UK and made its way to Pakistan earlier this week added to the uncertainty and resistance to the index performance in the initial sessions, he said.

“However, going forward, we expect bullish the trend to prevail as investors’ confidence seems to have strengthened with the New Year,” Ahmad added.

Umair Naseer, from Equity Sales of BMA Capital Management said, “Heading into 2021, we anticipate the market to sustain its positive momentum given the rising value of rupee against the greenback”.

Rupee strengthened 0.3 percent during the outgoing week with

improving macroeconomic indicators, inflation clocked in at 8 percent and exports jumped 18 percent, he said.

“Moreover, the arrival of COVID-19 vaccine by 2QCY21 will place the market in a bullish stance. We believe banks, E&Ps, fertilisers, autos and cements will lead the index performance this year,” Naseer added.

An Analyst from Arif Habib Limited said, "We expect the bull run in energy stocks to roll over next week and keep interest in the bourse alive”.

“Moreover, with over a million doses expected to be purchased from China within the ongoing quarter and subsequent distribution, easing COVID-19 concerns may fuel the rally further,” he said.

Yawar-uz-Zaman, head of research at Pearl Securities said, “We anticipate the market to remain upbeat in lieu with the positive initiatives taken at the end of CY20”.

During the week, investor participation improved 5.2 percent with average volumes clocking in at 640 million shares, while the average traded value also increased 1.3 percent to $142 million.

Foreign investors sold equities worth $46.22 million compared to a net sell of $20.44 million last week. Major selling was witnessed in all other sectors ($46.14 million) and technology ($0.95 million). On the local front, major buying was reported by companies ($41.09 million) and individuals ($20.04 million).

Sector-wise positive contributions came from banks (342 points), fertilisers (231 points), and oil & gas exploration (202 points), while power generation & distribution declined (37 points).

Scrip-wise positive contributions were led by OGDC (112 points), FFC (95 points), MEBL (68 points), ENGRO (64 points), and PSO (63 points). HUBC and KOHC led the negative contributions, declining 43 and 15 points respectively.