Zubair Yaqoob
Karachi
The market commenced on positive note this week, breaching 38,000 points level (last witnessed in April’19), amid continued confidence in business climate. Furthermore, IMF approved issue of sovereign guarantees worth PKR 250bn for tackling circular debt which improved sentiment in the power sector.
However, during the week bears briefly rushed in amid profit taking, implementation of axle load policy and higher inflationary readings causing concerns over delay in SBP’s policy rate cut. Albeit, the fear was temporary as as steep rally was witnessed as the week closed on Friday.
That said, the benchmark KSE-100 Index gained 342 points (up by 0.9%) WoW, settling at 37,926 points. Sector-wise positive contributions came from i) Power Generation & Distribution (140pts), ii) Fertilizer (102pts), and iii) Oil & Gas Marketing Companies (66pts) while negative contributions were led by i) Commercial Banks (74pts), ii) Transport (15pts) and iii) Refinery (11pts). Scrip-wise positive contributions were led by HUBC (132pts), FFC (94pts), PSO (40pts), LUCK (32pts) and NATF (29pts). Foreign buying was witnessed this week clocking-in at USD 8.5mn compared to a net buy of USD 4.2mn last week. Buying was witnessed in Commercial Banks (USD 6.7mn) and Fertilizer (USD 3.6mn).
On the domestic front, major selling was reported by Banks / DFIs (USD 15.2mn) and Insurance Companies (USD 2.6mn). Average Volumes settled at 331mn shares (up by 6% WoW) while average value traded clocked-in at USD 74mn (up by 15% WoW).
Other major news: KE dedicates 12MW grid to pharma, PIA acquires two A320 aircraft on dry lease, Ufone, PTCL announce joint major restructuring, Govt engages OGDC, PPL, MPCL to explore 4 blocks, Chinese company to invest $250 million in Service Industries, and vi) D G Khan Cement plans expansion. Analysts expect the market to remain positive in the upcoming week. As per expectation, policy rate remained unchanged at 13.25%.
With current account deficit turning surplus at USD 99mn in Oct’19 and foreign reserves rising amid investment in T-Bills (reaching USD 1bn) from Jul’19 to date, positive sentiments are expected to persist. The KSE-100 index is currently trading at a PER of 6.5x (2020) compared to Asia Pac regional average of 13.5x and while offering DY of ~8.4% versus ~2.6% offered by the region.
