As Ramadan started this week, the local bourse continued its bearish trend with volumes continuing to slump.
Talks between GoP and IMF are in the final round and an announcement of a program can be expected any time soon.
Concerns of further interest rate hikes, depreciation of the PKR and fiscal consolidation measures (revision in energy prices, withdrawal of subsidies/tax concessions etc) kept the investment sentiment negative.
The KSE-100 index closed at 34,717 points (-1,406 points WoW), down 3.9% WoW.
Negative sector-wise contributions came from Fertilizers (313 pts), Oil & Gas Exploration Companies (284 pts), Cements (130 pts), Pharmaceuticals (113 pts) and Oil & Gas Marketing Companies (108 pts).
Scrip-wise negative contributions came from ENGRO (131 pts), PPL (104 pts), SEARL (84 pts) and MARI (83 pts).
Whereas, positive scrip-wise contributions came from NESTLE (32 pts), HBL (21 pts), and COLG (11 pts).
Foreign buying continued this week clocking-in at USD 10.4mn compared to a net buy of USD 4.8mn last week. Buying was witnessed in Commercial Banks (USD 10.9mn) and Cement (USD 1.0mn).
On the domestic front, major selling was reported by Mutual Funds (USD 10.7mn) and Insurance Companies (USD 5.7mn).
Average Volumes settled at 74mn shares (down by 30% WoW) while value traded clocked in at USD 23mn (down by 22% WoW).
Other major news: i) Coal-fired power project’s receivables swell to $150mln, ii) Move to withdraw Rs700bn tax exemptions, says official, iii) Chaos in FBR as govt aims for budget on May 22, iv) Private sector tax expert named FBR chairman, and v) Public debt surges Rs3.6tr to a hefty Rs27.8tr.
With the IMF program expected to be announced, investor sentiment can be expected to rebound.
Clarity over the economic direction from the IMF program is likely to resuscitate confidence of investors. Equity analysts advise investors to accumulate positions in blue chip stocks with a long term view.
The KSE-100 index is currently trading at a PER of 6.9x (2019) compared to Asia Pac regional average of 14.0x and while offering DY of ~8.4% versus ~2.6% offered by the region.