The benchmark KSE-100 Index of Pakistan Stock Exchange (PSE) continued its positive stride this week. With the government taking stringent measures to deal with the external debt and current account deficit, foreign investors’ confidence in the local bourse has been restored.
A surprise rise in the policy rate by 25 basis points by SBP did not adversely affect the bullish momentum either.
Moreover, forex reserves have surged by 12% WoW, on the back of funds received from UAE and Saudi Arabia of USD 1bn each.
The market gained 848 points this week with the index closing at 41,113, up by 2% WoW.
Analysts at Arif Habib Limited said that the sector-wise positive contributions came from Commercial Banks (234pts) amid hike in policy rate, Oil & Gas Marketing Companies (129pts), Automobile Assembler (83pts), Oil & Gas Exploration Companies (74pts), and Cement (72pts).
On the flip side, sectors that contributed negatively include Tobacco (-41pts) and Automobile Parts & Accessories (-5pts).
Scrip-wise top performers were PPL (79pts), BAHL (64pts), PSO (50pts), LUCK (43pts) and MCB (39pts).
Foreign buying continued this week clocking-in at USD 12.3mn compared to a net buy of USD 17.0mn last week.
Major buying was witnessed in Commercial Banks (USD 7.7mn) and Exploration & Production (USD 1.7mn).
On the domestic front, major selling was reported by Mutual Funds (USD 5.3mn) and Companies (USD 4.0mn).
Volumes during the week settled at 175mn shares (up by 4% WoW) whereas value traded arrived at USD 49mn (down by 6% WoW).
Other major news, Govt imposes moratorium on new oil marketing companies, Kia Lucky Motors to start vehicle production by Sept, NAB hands over Rs750m cheque to official in BoP scam, IMF seeks further taxation measures from Pakistan, Govt to provide health card to 15 million families.
With all eyes set on the Saudi Crown Prince Mohammad Bin Salman visiting Pakistan on 16th Feb’19 and reportedly signing trade deals amounting USD 18bn, positive sentiment amongst investors is likely to prevail.
Moreover, foreign inflows are anticipated to continue keeping in view the government’s efforts to revive the economy and attract FDI.
Therefore, the market likely to remain positive next week. Our preferred stocks are OGDC, BAFL, BOP, UBL, LUCK, FFC, EFERT, NCL and HUBC.
The KSE-100 index is currently trading at a PER of 8.0x (2019) compared to Asia Pac regional average of 12.0x and while offering DY of ~7.0% versus ~2.9% offered by the region.
Read More: KSE-100 crosses 41,000 on policy rate