The market depicted a mixed trend during the outgoing week with the benchmark KSE-100 index witnessing some weakness at the beginning of the week amid rising conflict between Iran and the US. Sentiments further worsened mid-week given Iranian strike on US Military base in Iraq. Albeit, the Pakistani bourse echoed global stock markets, depicting a swift rally post speech of the POTUS Donald Trump, which helped deescalate tensions. With that, the market breached a 17-month-high level of 43k to close at 43,207points (up by 2.1% WoW, +884pts WoW).
Sector-wise positive contributions came from Commercial Banks (403pts), Oil & Gas Exploration Companies (178pts), Fertilizer (111pts), Power Generation (86pts), and Cement (77pts). Whereas! Negative sector-wise contribution came from Automobile Assemblers (44). Scrip-wise positive contributions were led by HUBC (105pts), HBL (95pts), PPL (88pts), LUCK (87pts) and UBL (73pts). Foreign buying witnessed this week clocking-in at USD 7.0mn compared to a net sell of USD 7.3mn last week. Buying was witnessed in Fertilizer (USD 5.9mn) and E&Ps (USD 1.8mn).
On the domestic front, major selling was reported by Mutual Funds (USD 5.9mn) and Individuals (USD 4.0mn). Average Volumes settled at 303mn shares (up by 8% WoW) while average value traded clocked-in at USD 78mn (up by 13% WoW). Other major news: Pakistan moves US court to stop over USD 6bn fine in Reko Diq case, Govt expects economic recovery by end of FY2020, Under TAPI project: Pakistan to seek reduction in cost of gas import, Public debt inches up 1.08% to PKR 32.130trn in July-Nov, Lend PSO a helping hand, ECC asks MoF, and ‘Prices of 89 essential medicines reduced by 15pc’.
As the market broke through its key resistance levels this week, Analysts believe the upwards trajectory may continue next week. Fundamentals appear intact with stable PKR, compressing current account deficit, and inflows in T-bills, PIBs and the local bourse, should all bode well for the index. Analysts advise investors to invest in blue chip scrips. The KSE-100 index is currently trading at a PER of 7.6x (2020) compared to Asia PAC regional average of 12.5x and while offering DY of ~6.3% versus ~2.7% offered by the region.