Stocks to track budget stimuli, virus spike

Loosening Covid clampdown and loudening political noise kept the market in yo-yo mode in week, while it is seen highly sensitive to budgetary stimuli and virus situation in the days to come, dealers said.

Week-on-week, KSE-100 Shares Index gained 1.6 percent or 740 points to close at 45,914.98 points.

Brokerage Arif Habib Limited in a note said after long Eid Holidays, the market commenced on a positive note given ease in lockdown restriction following drop in COVID-19 cases.

Moreover, optimistic sentiment also stemmed from the MSCI Semi Annual Review, where Pakistan’s weight witnessed an increase (0.023 percent from 0.016 percent earlier), in lieu of the Lucky Cement and TRG Pakistan addition to the EM Standard Index and Small Index, respectively, the brokerage said.

Meanwhile, it added that, favorable budgetary measures for the capital market under the FY22 budget kept the momentum green.

“With the monetary policy scheduled to be unveiled next week, we foresee the State Bank of Pakistan to maintain status-quo on its benchmark policy rate.”

“We believe the market performance will be dictated by budgetary expectations, while key risk for the medium term remains a spike in Covid-19 cases,” Arif Habib Limited report said.

Moreover, oil prices (Arab Light) during the week dropped by 4 percent, settling at $64.72/bbl, which mounted some pressure on energy shares.

KSE-30 Shares Index on the other hand gained 1.35 percent or 249 points to close at 18,719.15 points over the last week.

Pearl Securities in its market review said stocks moved both ways during the week owing to ease in Covid restrictions along with stable T-Bills auction cut-off.

Byco Petroleum drew investor interest as the major shareholder partially divested its shareholding, the brokerage report said.

The brokerage further said better macros, higher auto sales and reports regarding removal of duties on raw material imports in the upcoming budget lifted market sentiment.

Average daily traded volume jumped 152 percent to 609 million shares a day while traded value averaged at $137 million a day.

Foreign selling continued this week and clocked in at $49.4 million compared to a net buy of $1.0 million last week.

Selling was witnessed in all other sector ($43.4 million) and oil and gas exploration and production ($7.8 million).

On the domestic front, major buying was reported by individuals ($37.2 million) and companies ($18.1 million).

Ali Zaidi at JS Global Capital said the declining Covid cases played a part in boosting investor confidence. “Some political friction sprouted towards the mid of the week as Jahangir Tareen formalised a split in the PTI which resulted in some negative sentiments on the bourse,” Zaidi said.

On the economic front, workers’ remittances for 10MFY21 were reported at $24.2 billion, the highest inflow on record. Furthermore, following PM Imran Khan's visit to Saudi Arabia, the Kingdom agreed in principle to resume the deferred oil facility to Pakistan.

Moreover, the Monetary Policy Committee is scheduled to meet on May 28th where the status quo is likely to prevail.

In the MSCI Semi-Annual Index Review, Lucky Cement, up 2.7 percent, was upgraded to the Global Standard Index while OGDC (Oil & Gas Development Company), down 2.9 percent, was removed from the same. Furthermore, TRG Pakistan, up 5.2 percent, was added to the Global Small Cap Index. Analysts expect the market to remain positive in the upcoming week generally.