PSX weekly review: Positive triggers put KSE-100 index into forward gear

• Positive momentum was driven by investors’ anticipation of approval of $1bn disbursements from IMF.
• KSE-100 index gains 832 points to end the week at 45,910.
• AHL says the positive sentiment will prevail at the bourse.

KARACHI: Bulls ruled the Pakistan Stock Exchange (PSX) in a rally during the week, which pushed the KSE-100 index up by over 832 points, or 1.85%, to settle at 45,910 points as the International Monetary Fund (IMF) resumed Pakistan’s stalled 46 billion loan programme.

The positive momentum during the week was mainly driven by investors’ anticipation of approval of $1 billion disbursements by the IMF executive board under Extended Fund Facility (EFF).

Bullish momentum expedited further owing to investors’ optimism concerning forthcoming healthy corporate results.

The market also welcomed $1 billion proceeds from the issuance of international Sukuk bonds in the midweek.

Meanwhile, oil prices, which are hovering at their seven-year high, kept the buyers’ interest alive in the exploration and production sector throughout the week.

Unfortunately, bears were seen breaking the three-day positive streak of the bourse on the second last day of the week owing to general profit-taking as investors opted for the “buy the rumour, sell the news” strategy.

However, the bulls once again staged the comeback and closed the week on a positive note.

Other major developments during the week were: PM Imran Khan reached Beijing, petroleum products’ prices remain unchanged, GST on petroleum products was abolished, petroleum levy was revised downward, IMF forecast real growth at 4% at factor cost, Drug Regulatory Authority of Pakistan agreed to raise the price of paracetamol to end shortage, the US reaffirmed that Pakistan is still a strategic partner, and auto industry decried imposition of taxes.

Meanwhile, foreign selling was witnessed this week, clocking in at $4.42 million against a net sell of $4 million recorded last week. Selling was witnessed in technology ($2 million), and commercial banks ($1.7 million).

On the domestic front, major buying was reported by other organisations ($3.9 million), followed by mutual funds ($3 million).

During the week under review, average volumes clocked in at 289 million shares (up by 54% week-on-week), while average value traded settled at $55 million (up by 43% week-on-week).

Major gainers and losers of week

Sector-wise positive contributions came from commercial banks (+189 points), fertilisers (+132 points), oil and gas exploration companies (+92 points), and textile composite (+69 points). On the flip side, negative contributions came from technology and communication (-26 points), power generation and distribution (-5 points) and automobile assemblers (-4 points).

Scrip-wise major gainers were HBL (+60 points), Fauji Fertiliser Company (+52 points), BAHL (+51 points), Oil and Gas Development Company (+51 points) and Pakistan State Oil (+50 points). Meanwhile, scrip-wise major losers were TRG Pakistan (-18 points), Systems Limited (-17 points) and Hubco (-12 points).

Outlook for next week

A report from Arif Habib Limited predicted: “Several positive announcements are expected as an outcome of PM Imran Khan’s visit to Beijing which is likely to greet developments in textile, IT, defence manufacturing and engineering sector.”

Moreover, it said that announcements regarding trade enhancement and balance of payment support, will “keep positive sentiment in the bourse upbeat going forward.”

“Moreover, corporate results spell will be carried forward in the forthcoming week too with investors hope of strong earnings growth coupled with attractive dividend payouts, directing the market in the green zone,” it said.

“The KSE-100 is currently trading at a PER of 5.2x (2022) compared to the Asia-Pacific regional average of 13.8x while offering a dividend yield of 8.5% versus 2.4% offered by the region,” the brokerage house stated.