Zubair Yaqoob
Karachi
The market commenced on a positive note, continuing the rally being witnessed since the last three weeks. During the mid-week, 13 days winning streak came to an end as the index slipped by 66 points on account of profit taking.
Optimism in the bourse was sourced from: Capital injection from local investors as equities are being viewed as the preferred asset class, Government planning to build low cost subsidized houses which rejuvenated investors’ interest in the cement sector, State Bank of Pakistan has asked all commercial banks to allocate five percent of their portfolio to construction sector, again attracting interest in cements and PM inaugurated construction works at Diamer Bhasha Dam that will increase demand for Cements and Steel.
Likewise, Commercial Banks performed well due to expectation of improved earnings in the upcoming results. As a result, the KSE-100 index closed at 37,331pts, up by 1,140pts or 3.15% WoW. Contribution to the upside was led by Cements (213pts), Oil and Gas Exploration Companies (196pts), Fertilizer (149pts), Automobile Assembler (91pts), and Commercial Banks (55pts). Scrip wise major gainers were LUCK (85pts), POL (78pts), DAWH (77pts), PPL (75pts), and INDU (63pts). Whereas, scrip wise major losers were BAFL (13pts), NBP (9pts) ABOT (8pts), SYS (8pts) and COLG (7pts). Foreigners offloaded stocks worth of USD 27.37mn compared to a net sell of USD 9.46mn last week.
Major selling was witnessed in E&P (USD 20.40mn) and Fertilizer (USD 2.61mn). On the local front, buying was reported by Individuals (USD 15.93mn) followed by Insurance Co. (USD 14.29mn).
That said, average daily volumes and traded value for the outgoing week were up by 22% and 34% to 426mn shares and USD 99.3mn, respectively. Other major news; Each house in first 0.1m units to get Rs0.3m subsidy: PM, IMF predicts economic recovery in Pakistan next year, Remittances hit historic high of $23.121bn, June passenger cars sales plunge 52pc YoY, and ‘Will build biggest dam in Pakistan’s history’: PM Imran kicks off construction work at Diamer-Bhasha Dam. Going forward, analysts expect the market to remain green especially cyclical sectors to remain in the limelight including Cements and Steel due to government focusing on reviving economic activity through housing and construction sector.
That said, continuous slowdown in Covid-19 cases on daily basis is further improving investors’ confidence. The KSE-100 is currently trading at a PER of 8.1x (2020) compared to Asia Pac regional average of 13.1x while offering a dividend yield of ~6.0% versus ~2.7% offered by the region.
