Stocks eke out 271 points amid mounting uncertainties

KARACHI: The stock market remained lifeless for all the outgoing week with the KE-100 index putting up a volatile activity and finally closing with a nominal gain of 271 points, or 0.6 per cent, at 47,834.

The important resistance level of 48,000 level could not be breached. The week was full of uncertainties that drove away investors resulting in low participation.

On top of the list was the rising Covid cases with national positivity ratio up by almost 5pc that prompted the Sindh government to put in place some restrictive measures. Investors stayed to sidelines amid mounting uncertainties in Afghanistan and the rising political heat in the wake of upcoming elections in Azad Kashmir. Investors were disinclined to enter the market due to long Eid holidays ahead; the rising value of the dollar against the rupee and the uptick in international prices of oil and coal; the latter likely to impact cyclicals, mainly cement.

On the positive side, Pakistan issued $1bn Eurobonds that built up SBP’s foreign exchange reserves to $18.2bn, the highest level in four years. There was 14.57pc growth in Large-Scale Manufacturing (LSM) in 11MFY21 and a record $29.4bn received as workers’ remittances during FY21.

Sector-wise positive contributions came from commercial banks (82 points), technology & communication (75 points), cement (46 points), textile composite (36 points), and investment banks/securities companies (36 points).

Meanwhile, the sectors that contributed negatively included fertiliser (36 points), power generation & distribution (17 points), pharmaceuticals (13 points), oil & gas exploration companies (12 points) and automobile parts & accessories (7 points).

Foreign investors purchased stocks worth $4.6m against net sale of shares of $5.2m the preceding week. Inflow was witnessed in cements amounting to $1.32m, exploration and production $1.30m and technology and communications $1.30m.

On the domestic front, major selling was reported by individuals ($9.98m) and broker proprietary trading ($6.32m). Insurance companies were net buyers of stocks worth $ 12.7m.

Average daily trading volume declined 4pc to 467m shares, while average the value traded fell 10pc to $96m. Worldcall topped the list of volume leaders with 231.0m shares.

Going forward, the market is expected to move sideways as it would be closed for trading in the major part of the week due to Eid holidays. Moreover, the upcoming roll-over week could keep investors’ interest in check. Market men foresee strong activity by the end of the month of May as the 4QFY21 results season gets going in full swing.

Investor interest may remain in cyclicals on the hope of having caught up with the growth momentum and payout. Although the political situation in Afghanistan and the upcoming elections in Azad Kashmir could be disturbing, the only fly in the ointment is the fourth wave of Covid-19, which could spike new cases, regardless of the vaccination process.

Published in Dawn, July 18th, 2021


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