The market continued to bleed this week, commencing on a negative note. The expectation of positive sentiments upon agreement of IMF Program did not materialize. Investors remained cautious due to tough measures attached with the program.
However, investors took a sigh of relief mid-week owing to Pakistan’s emerging market status being retained, positive news regarding offshore drilling (final stages) and approval of amnesty scheme by the cabinet.
The momentum, however, was short lived as the Pak Rupee witnessed depreciation against the USD and concerns persisted over a significant rate hike in the upcoming monetary policy statement.
The market shed 1,550 points (down by 4.5%) WoW, closing at 33,166 points.
Negative sector-wise contributions came from Fertilizers (335 pts), Cements (237 pts), Commercial Banks (229 pts), Oil & Gas Marketing Companies (219 pts) and Pharmaceuticals (92 pts).
Whereas, sectors that contributed positively include i) Oil & Gas Exploration Companies (83 pts) and ii) Power Generation (19 pts).
Scrip-wise negative contributions came from FFC (161 pts), PSO (85 pts), ENGRO (80 pts) and HBL (76 pts).
Whereas, positive scrip-wise contributions came from PPL (109 pts), HUBC (84 pts), and POL (49 pts).
Foreign buying continued this week clocking-in at USD 8.2mn compared to a net buy of USD 10.4mn last week. Buying was witnessed in Commercial Banks (USD 8.2mn) and Cement (USD 5.6mn).
On the domestic front, major selling was reported by Mutual Funds (USD 19.1mn) and Insurance Companies (USD 2.4mn).
Average Volumes settled at 107mn shares (up by 46% WoW) while value traded clocked in at USD 29mn (up by 29% WoW).
Other major news: ECC approves 150MW power supply to K-Electric, Forex reserves fall to $15.894 billion, Textile ministry disburses Rs52bln, FBR slaps Rs300/kg tax on tobacco sale, and OGDC discovers gas, condensate in Sindh.
With monetary policy to be announced in the coming week investors are most likely to have a cautious approach and bearish sentiments may persist.
Given uncertainty in PKR/USD parity, macro-economic concerns and lack of positive triggers we expect the market to trade range bound.
However, attractive valuation may revive investor sentiments. The KSE-100 index is currently trading at a PER of 6.8x (2019) compared to Asia Pac regional average of 13.8x and while offering DY of ~6.8% versus ~2.4% offered by the region.
Pakistani Rupee touched Rs 150 against US dollar on Saturday in cash free market