Staff Reporter Karachi
The Pakistan Stock Exchange (PSX) is likely to maintain positive momentum in the week starting today (Monday) due to end to Sindh lockdown, expected corporate profitability, improvement in the macroeconomic fundamentals, and accommodative monetary policy stance.
However, the ongoing fourth wave of Covid-19 may add some risk to investors’ confidence, albeit new cases and positivity rate inched down in the end of the last week.
Again, instability in oil prices could keep market performance in check, as crude prices declined on a week-on-week basis and recorded their worst week since March.
This decline was despite the fact that crude prices recovered some losses in the last two sessions.
Any further downtrend in rupee against the US dollar may rail investors’ confidence and fuel profit taking.
However, with the $2.8 billion SDR allocation expected from the International Monetary Fund (IMF) in August, the reserves position will consolidate further which is significantly positive given uncertainty over the external account outlook.
On the regional front, the conflict in Afghanistan continues to be a major concern, especially for foreign investors, that may restrain the market from posting exorbitant gains.According to analysts at Arif Habib Limited, the stock market is likely to stay in green during this time owing to a lower interest rate regime.
They said that the low interest rate regime and pro-growth stance of the State Bank of Pakistan (SBP) should keep equities attractive.
Moreover, the result season should keep cyclical in limelight while reduced provisioning, and healthy fee income/capital gains should help fuel banking earnings. They said that Covid-19 fourth wave is a concern which may keep sentiment jittery.
Taking a view of the last week performance of PSX, the benchmark KSE-100 Index managed to close the week with a gain of 435 points (+0.92 percent) at 47,489.95 points. Trading remained volatile throughout the week with the index finishing three out of five sessions in the green.
The KSE-100 index is currently trading at a PER of 6.7x (2021) compared to Asia Pac regional average of 16.1x while offering a dividend yield of 6.6 percent versus 2.4 percent offered by the region.
Sector-wise positive contributions came from commercial banks (193 points), oil & gas marketing companies (52 points), and chemicals (52 points).
Meanwhile, the sectors that contributed negatively included food & personal care (21 points).