Week ahead: Stocks likely to tread water in tight trade

• Index gains 1,237 points or 2.95% wee-on-week
• Saudi crown prince visit delay to weigh on sentiment.
• Market likely to remain range-bound in upcoming week.

KARACHI: Stocks are expected to tread water as investors are unlikely to go far from the safety of the sidelines amid political risks during the upcoming week.

The KSE-100 index gained 1,237 points or 2.95% to close at 43,093 points week-on-week at Pakistan Stock Exchange (PSX).

Arif Habib Ltd (AHL) in its weekly market review said the market was expected to trade in the range next week as the participants were mostly seen as cautious due to the political noise in the country.

“Any positive news from the finance minister’s visit to UAE and International Monetary Fund's (IMF) ninth review will benefit the market,” the brokerage said.

The market commenced on a positive note this week as the country is expected to get $13 billion in financing from China ($9 billion) and Saudi Arabia ($4 billion).

The momentum carried on during the week as the Crown Prince and also Prime Minister of Saudi Arabia, Mohammed bin Salman Bin Abdulaziz Al Saud, was expected to visit Pakistan on November 21 and was likely to announce various investment projects.

However, the crown prince on Saturday postponed his trip to Pakistan. Foreign Office Spokesperson Mumtaz Zahra Baloch confirmed the visit was being rescheduled.

“The new dates will be mutually finalised by the two sides,” she said. The crown prince was invited by Prime Minister Shehbaz Sharif in a telephone conversation between the two in September.

This development will be taken as a setback by the investors as it, on the face of it, casts doubts on an expected Saudi bailout worth $4.2 billion and around $10 billion investment in a refinery project in Gwadar.

During the week, the rupee was slightly down against the greenback on the last day of the week, closing at Rs221.95, down by 0.1%.

To add to the economic woes of the country, the State Bank of Pakistan’s reserves fell $7.95 billion this week after debt servicing burned a $956 billion hole in the central bank’s dollar stash. The reserves clocked in at S8.91 billion on October 28, 2022.

Foreigners selling clocked in at $4.7 million compared to a net sell of $1.6 million last week. Major selling was witnessed in banks ($5.3 million), technology and communication ($1.1 million) and other sectors ($0.4 million).

On the local front, buying was reported by mutual funds ($3.6 million) followed by banks/DFIs ($3.0 million).

Average volumes clocked in at 251 million shares, up 10% WoW, while the average traded value settled at $33 million, up 31% WoW.

Major gainers and losers

Sectors that underpinned the index during the week were: commercial banks (368 points), oil and gas exploration companies (285 points), technology and communication (205 points), cement (80 points), and power generation and distribution (76 points).

Whereas, sectors that weighed the index down included miscellaneous (-87 points), automobile parts and accessories (3 points), and food and personal care products (2 points).

Stocks that turned out to be the major gainers were TRG Pakistan (176 points), Oil and Gas Development Company (130 points), Pakistan Petroleum Limited (119 points), Meezan Bank Limited (106 points), and Bank Al-Falah (56 points).

Meanwhile, scrip-wise negative contribution came from Pakistan Services Limited (81 points), Rafhan Maize Products Company Limited (29 points), Shifa International Hospitals Limited (6 points), Standard Chartered Pakistan (3 points), and Interloop Limited (3 points).