Pakistan Stock Exchange (PSX) commenced on a negative note despite historic visit of the Saudi Crown Prince where both the governments signed an investment deal worth USD 21bn. Analysts believe market activity remained sluggish and the index hovered sideways on the back of tension between Pakistan and neighboring country India post Pulwama terrorist attack which led to the imposition of 200% regulatory duty on Pakistani exports; this triggered a selling pressure in cement scrips, Lower than expected results of heavy weight scrips (UBL, HBL, HUBC and KAPCO), and iii) ongoing meeting of the Financial Action Task Force (FATF) to review Pakistan’s status. As a result, the benchmark KSE-100 index closed at 40,016pts, down by 471pts or 1.16% WoW.
Contribution to the downside was led by Power Generation and Distribution (-142pts) due to absence of dividend in their recent result announcement, Commercial Banks (-139pts) amid lower than expected results, Pharmaceuticals (-35pts), Transport (-27pts), and Tobacco (-26pts).
Scrip wise major losers were UBL (-120pts), HBL (-115pts), HUBC (-68pts), KAPCO (-56pts) and SNGP (-37pts). While, the only sector that contributed positively to the index was Oil and Gas Exploration Companies (+85pts) due to surge in international oil prices.
Analysts at Arif Habib said that the foreign buying continued this week clocking-in at USD 3.5mn compared to a net buy of USD 12.1mn last week. Major buying was witnessed in Cements (USD 3.3mn) and Commercial Banks (USD 1.4mn).
On the local front, selling was reported by Individuals (USD 4.7mn) followed by Companies (USD 1.0mn). That said, average daily volumes for the outgoing week were down by 22% to 105mn shares likewise value traded decline by 14% to USD 39mn.
On news front: Current account deficit shrank by 16.7% in seven months, ‘Existing gaps narrowed’: IMF negotiations nearing conclusion, says Asad Umar, Pakistan has come out of financial crisis: SBP governor, Non-essential Indian items: 200 percent RD may be imposed, FDI hits 6-month low as concerns over IMF resurface, and Roadmap for USD 21bn Saudi investment finalized.
After tracking negative leads in the past three weeks, we expect the benchmark index to witness a rebound given improvement in economy as current account deficit has narrowed by 17% to USD 8.4bn coupled with tension between Pakistan and India cooling off and materialization of Saudi deal which will improve the investment climate.
On the other hand, rising international oil prices and expected result announcement of INDU, DGKC, NML, ASTL, PPL, SEARL and BOP may keep these scrips under limelight.