Weekly review: KSE-100 to remain range bound upcoming week

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KSE-100 surges 129 points
KSE-100 surges 129 points

The market commenced on a negative note this week, shedding 403 points on Monday. Expectations of a rate hike and potential pressure on leveraged sectors kept the market dull. However, IMF team’s visit to Pakistan and news flow regarding consensus on economic policies later in the week created a positive momentum.

Moreover, USD 2.2bn loan from China took the weekly reserves to USD 17bn. With this, the KSE-100 Index gained 117points (up by 0.3% WoW) closing at 38,649 points.

Positive sector-wise contributions came from i) Oil & Gas Marketing Companies (+76 pts),  Fertilizer (+41 pts), Automobile Assembler (+36 pts),  Pharmaceuticals (+25 pts) and Engineering.

On the flip side, sectors that contributed negatively include Power Generation & Distribution (-52 pts), Food & Personal Care Products (-23 pts) and Insurance (-23 pts).

Scrip-wise major positive contributions came from SNGP (+38 pts), MTL (+30 pts), BAHL (+30 pts), ENGRO (+24 pts), and UBL (+24 pts).

Scripts that contributed negatively includes HBL (-64 pts), HUBC (-54 pts) and NESTLE (-29 pts).

Analysts at Arif Habib Limited said that foreign buying continued this week clocking-in at USD 0.5mn compared to a net buy of USD 3.1mn last week.

Buying was witnessed in Commercial Banks (USD 2.6mn) and Exploration & Production (USD 1.1mn). On the domestic front, major selling was reported by Individuals (USD 5.4mn) and Companies (USD 5.0mn).

Volumes settled at 128mn shares (up 53% WoW) while value traded clocked in at USD 31mn (up 10% WoW).

Other major news: Gwadar terminal developer plans IPO for $85 million project, SNGPL, SSGCL seek hefty tariff hike from next fiscal year, Descon, CGGC awarded Mohmand Dam Project, Govt to raise Rs2 per unit on power tariff to collect Rs200 bn, and Pakistan weighs LNG imports from Saudi, Malaysia.

Market Outlook

Analysts expect the market to remain range bound in the upcoming week amid lack of triggers. With the State Bank of Pakistan raising the key discount rate by 50 bps, leveraged sectors such as Cements, Steel, Fertilizers, OMCs and Textiles may come under pressure while banks could support the index.

The KSE-100 index is currently trading at a PER of 7.8x (2019) compared to Asia Pac regional average of 12.7x and while offering DY of ~7.5% versus ~2.7% offered by the region.