Result season may keep PSX green in two-session week

Staff Reporter

The Pakistan Stock Exchange (PSX) is likely to remain range-bound in the two-session week starting today (Monday) as the market will open only on Monday and Friday due to three Eid-ul-Azha holidays (July 20-22).

As sessions on Monday and Friday will be followed by three holidays and two off-days, respectively, investors may prefer to avoid risks and securities showing healthy earnings will be in limelight.

Expected corporate profitability will be a factor that can create hawkish sentiment in the bourse; however, the ongoing fourth wave of Covid-19 may add some risk to investors’ confidence as the country recorded 15,991 fresh coronavirus cases last week, a number not witnessed in at least six preceding weeks.

Again, instability in oil prices could keep market performance in check, albeit crude prices declined on a week-on-week basis and recorded their worst week since March under the double blow of additional OPEC supply coming to markets and unfavourable fuel inventory data from the United States.Downtrend in rupee against the US dollar may rail investors’ confidence and fuel profit taking.

On the regional front, the conflict in Afghanistan continues to be a major concern that may restrain the market from posting exorbitant gains.

“Next week the market is expected to continue the momentum it gained this week,” stated the Arif Habib Limited report.

“We highlight cyclical sectors to be in the limelight due to healthy earnings expected in the upcoming result season.”

Taking a view of the last week performance of PSX, the benchmark KSE-100 Index managed to close the week with a gain of 271 points (0.6 percent) at 47,834.38 points.

Trading on Monday kicked off on a negative note and the market dropped as concerns over rising coronavirus cases coupled with the anticipation of another lockdown shattered investor confidence.

However, the market bounced back in the next session and remained on an upward trajectory for the rest of the week owing to historic rise in remittances to all-time high level of $29.4 billion in fiscal year 2020-21, increase in the country’s foreign currency reserves to four-and-a-half-year high, and a surge of 90 percent in the number of vehicles sold in fiscal year 2020-21 compared to the previous year.

According to a report from Arif Habib Limited, “The week saw the index gaining some momentum in spite of a continued rise in Covid cases on account of the delta variant.”

Despite positive triggers, trading remained sombre as concerns over mounting Covid-19 infections and announcement of measures to curb them took a toll on investor sentiments.

Mid-way through the week, the Sindh government announced fresh restrictions to keep rising virus cases in check.

Average daily traded volume contracted 4 percent week-on-week to 467 million shares while average daily traded value declined 10 percent week-on-week to settle at $96 million.

The sectors propping up the index included commercial banks (82 points), technology and communication (75 points), cement (46 points), textile composite (36 points) and investment banks/investment companies/securities companies (36 points).

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