Daily Times

The Pakistan Stock Exchange (PSX) is likely to remain volatile this week due to the results season and expectations of growth in various sectors may keep the market in the green zone.

According to analysts, having witnessed a flattish last week, the stocks are expected to perform well in the fiscal year 2021-22 on account of robust earnings growth forecast for cement, steel and allied sectors, amid strong cyclical demand driven by the historic high Public Sector Development Plan (PSDP) allocations and the focus on Naya Pakistan Housing Scheme.

An analyst at Arif Habib Limited said: “The stocks should perform on the expectation of an auto and refinery policies, downwards sticky oil prices supporting the exploration and production (E&P) sector, and commencement of the monetary tightening, which should once again garner interest in commercial banks.”

An analyst at JS Global Capital said that investors’ participation declined last week, as the average daily volumes dipped 10 percent to 622 million shares per day, while the value of the traded securities averaged at $107 million per day, down 4 percent from the preceding week.

The market remained range-bound last week with the volatile trading on account of June-end closing and adjustment of portfolios, he said. Moreover, as the debate on the federal budget moved towards the final stages in the parliament, some stiffness was witnessed in the political climate, albeit the budget was passed with a majority vote. The market also gained momentum on the first day of the new fiscal year, he added

An analyst at Pearl Securities said the market reacted to the developments such as the US started withdrawing troops from Afghanistan, the current account posted a deficit of 632 million in May 2021, inflation for June 2021 stood at 9.7 percent, the Federal Board of Revenue (FBR) surpassed FY21 tax collection target, and the National Accountability Bureau (NAB) allowed the Power Division to process independent power producers (IPPs) payments.

The Pakistan Stock Exchange KSE-100 shares index gained 0.17 percent, or 82.82 points, to close the week ended July 2, 2021 at 47,686.18 points. The KSE-30 shares index gained 0.07 percent, or 13.21 points, to end at 19,100.47 points.

Foreign selling continued last week clocking in at $8.4 million, compared with a net selling of $7.9 million last week. The selling was witnessed in commercial banks ($3.2 million) and other sectors ($1.4 million). On the domestic front, major buying was reported by individuals ($13.6 million) and companies ($13.4 million).

The sector-wise positive contributions came from technology (105 points), pharmaceuticals (68 points), food and personal care (51 points), tobacco (22 points), and the insurance sector contributing 14 points to the index.

The sectors that contributed negatively included commercial banks (46 points), power generation and distribution (44 points), oil and gas exploration companies (39 points), oil and gas marketing companies (36 points) and the refinery shedding 18 points off the index.

The benchmark KSE-100 Index is currently trading at a PER of 6.9x (2021) compared to Asia Pac regional average of 16.5x while offering a dividend yield of 6.9 percent versus 2.3 percent offered by the region.