Daily Times

Expectations of relief in the upcoming budget, payment of Rs89.2 billion to 20 independent power producers (IPPs), upcoming policies on auto and refinery, strong economic indicators, dropping coronavirus cases and increasing vaccine rollout are likely to keep the Pakistan Stock Exchange (PSX) in green zone this week.

Although the benchmark KSE-100 Index crossed three psychological barriers of 46,000, 47,000 and 48,000 points during the last two weeks, yet expectations of favourable budgetary measures amid positive growth and corporate figures may push the market up. The benchmark index at present stands at 4-year high.

Again, the candle sticks review of the last week shows that profit-taking was there and investors opted for it in at least three sessions. The benchmark index of Pakistan Stock Exchange, KSE-100, crossed the psychological barrier of 48,000 points last week. Overall, the KSE-100 shares index gained 1,085.41 points (+2.3 percent) to close the week ended June 4, 2021 at 48,211.70 points. The KSE-30 Index gained 355.17 points (+1.8 percent) to close at 19,654.65 points.

A report issued by a brokerage house, Arif Habib Limited, noted, “We expect the market to remain positive, with the view of a positive budget for the market scheduled for June 11. However, we cannot rule out short-term dips in the market due to Covid-19.”

The report further said the market was mainly fuelled by the expectation of favourable budgetary measures for the capital market, and for economic growth under the FY22 budget. “Likewise, tax revenue collection hit a historic high of around Rs4.143 trillion during 11MFY21, further fuelling the market. Additionally, inflation clocked in at 10.87 per cent, lower-than-expected,” it added.

Amreen Soorani, an analyst at JS Global Capital, said that stocks managed to close above 48,000 points this week, with investors weighing taxation-related budget leaks. “Declining Covid-19 cases and upward revision in growth estimates continued to fuel the positive sentiments,” said Soorani.

Investors’ participation held ground where though average volumes declined 9.4 percent to 1.12 billion, the average value of traded securities increased 8.3 percent to $192 million.

Meanwhile, the price of crude oil made back all that it lost during the Covid-19 pandemic as oil futures finished week by up to 5 percent higher amid optimistic demand expectations. Brent, the international benchmark for two-thirds of the world’s oil, rose 4.6 percent to the highest finish since May 21, 2019 to close the week at $71.89 a barrel after trading as high as $72.17 a barrel. Likewise, the US West Texas Intermediate (WTI) crude futures scored a 5 percent weekly rise, marking the highest front-month contract finish since October 17, 2018, to reach $69.62 a barrel. This helped fuel the performance of exploration and production (E&P) scrips.

Over the weekend, the government completed the payment of the first instalment of Rs89.2 billion among 20 IPPs and this will help improve the performance of shares of the oil and gas marketing companies.

Foreign portfolio investors offloaded $0.2 million worth of securities during the outgoing week, compared to a net inflow of $2.1 million last week.

The KSE-100 is currently trading at a PER of 7.1x (2021), compared with the Asia Pacific regional average of 16.6x while offering a dividend yield of 6.8 percent versus 2.6 percent offered by the region.

Sector-wise positive contributions came from oil & gas marketing companies (125 points), cement (120 points), oil & gas exploration companies (115 points), power generation & distribution (82 points) and pharmaceuticals (72 points). Meanwhile, the sectors that contributed negatively include synthetic & rayon (2.89 points), real estate & investment trust (1.43 points) and vanaspati & allied industries (0.12 points).