Daily Times

The Pakistan Stock Exchange (PSX) is likely to keep bullish momentum going on this week amid strong economic indicators, dropping coronavirus cases as well as increasing vaccine rollout, and expectations of relief in the upcoming budget.

The fundamental economic recovery, stable outlook on the external sector, impressive corporate profitability, strong liquidity and prevailing attractive valuations are likely to ignite buoyancy in the bourse this week.

The benchmark index of Pakistan Stock Exchange, KSE-100, crossed two psychological barriers of 46,000 points and 47,000 points last week amid 3.94 percent growth in gross domestic product (GDP) and expectations of favourable budgetary measures for the capital market in the upcoming budget. Overall the KSE-100 Index gained 1,219.9 points during the last week as the market opened at 45,906.39 points on Monday last and closed at 47,126.29 points.

Financial gurus, including Arif Habib and Aqeel Karim Dhedhi, are expecting that the GDP growth number would be over 4.5 percent when the financial year concludes by June-end. Such statements by two top experts who hold a grip over financial markets, are most likely to influence the PSX in a positive way. Arif Habib a few months earlier had predicted that the benchmark index of Pakistan Stock Exchange, KSE-100, will reach up to 52,000 points by next December.

The announcement of Finance Minister Shukat Tarin on Sunday that power tariffs won’t be increased in future and those paying taxes won’t be burdened with more taxes will certainly boost investors’ confidence.

The vaccination rollout is increasing in the country amid dropping cases of the coronavirus, while the country reached the 383,000 Covid-19 vaccination mark in a single day on Sunday and the total number of vaccinations has crossed 7 million mark. Analysts hoped that the market will remain bullish in the upcoming week amid expectation of relief in the upcoming budget, reduction in duties on imported raw material for construction sector and export oriented sector to spur growth which might keep these sectors in limelight. On the other hand, E&Ps scrips are expected to continue performing well due to higher international oil prices and government shelving divestment plan of E&Ps scrips.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.0x (2021) compared to Asia Pac regional average of 16.3x while offering a dividend yield of 6.9 percent versus 2.6 percent offered by the region.

During the last week, sector-wise positive contributions came from commercial banks (456 points), oil & gas exploration companies (163 points), cement (131 points), technology & communication (120 points) and fertilizer (89 points). Meanwhile, the sectors that contributed negatively include tobacco (26 points) and chemical (17 points). Scrip-wise positive contributors were HBL (174 points), BAHL (103 points), PPL (101 points), SYS (92 points), and OGDC (82 points). Foreign buying was witnessed at $32.1 million against a net sale of $49.3 million in the preceding week. Buying was witnessed in cement ($23.9 million) and technology and communication ($9.2 million).

On the domestic front, major selling was reported by individuals ($10.2 million) and mutual funds ($7.4 million). Average volumes arrived at 1,238 million shares while average value traded settled at $178 million.