Weekly Market Roundup

Equity Roundup

Dull, neutral, sideways and stagnant were some of the words used by analysts to describe trading activity during the week as the index gained less than 6 points and the average daily volume fell to 106 million shares.

A note from JS Research highlighted “The outcome of the IMF and FATF reviews continued to dominate the headlines and market sentiment, leading to some nervousness for market participants”.

The KSE100 index traded in a range of just 650 points or 1.62 percent of previous weeks close, making a weekly high of 40,698 (+455 or 1.13 percent) and a low of 40,047 (-196 or 0.49 percent).

Of the 97 companies traded during the week, 49 closed up, 44 were down while 4 remained unchanged.

Commercial Banks led the gains as they added 76 points to the index courtesy of HBL and UBL contributing 65 and 48 points respectively.

Ironically while OGDC and FFC added 26 and 24 points to the index the Oil & Gas and Fertilizer sectors took 62 and 55 points away from the index while tobacco was bad for the index’s health by 32 points.

The all share market capitalization declined by USD 222 million or 0.45 percent compared to the previous week.

Figures released by the NCCPL show that Foreign investors were net sellers by USD 8.6 million with Foreign Corporates leading the way with a net sell of 7.8 followed by overseas Pakistanis selling USD 0.685 million.

Local Investors picking up the most shares were Insurance Companies with USD 7.844 million followed by Corporates with USD 1.95 million while Mutual Funds were net sellers by USD 2.16 million and individuals were the largest sellers, offloading shares worth USD 3.128 million.

Looking forward, Spectrum Research expects the market to stay range-bound in the upcoming week the next wave of demand induced from the construction site and exports oriented sectors, which are under pressure currently due to the high inflation and interest rates.

Furthermore, spectrum research added “The step taken by the government towards controlling prices and shortage of perishable items will help to curb high inflation. Falling inflation will ensure interest rate reversal in the not-too-distant future”.

Similar sentiment was expressed by Arif Habib Research who expect “the equity bourse to remain neutral to positive on the back of conclusion of the FATF review, expected approval of IMF’s third tranche, and imposition by the Federal Government on export of essential food items (Onions, Potatoes and Tomatoes) so as to control rising inflation along with deferment of hikes in utility rates till Jun’20. Moreover, improvement witnessed on the macroeconomic front, with the Current Account Deficit (CAD) shrinking by 72% in 7MFY20 and rising foreign investment in debt securities exceeding the USD 3bn mark, also augur well”.

Forex Round

PKR ended its run of successive gains as the local currency closed at 154.20 against the dollar, down by around 3 paisa compared to last week.

The currency was fairly stable trading in a range of 12 paisa during the week as 10-day volatility declined from 0.83 percent to 0.81 percent.

Fixed Income

Yields for the longer-term PIBs retreated during the week as the 3, 5 and 10-year rates came down by 10, 17 and 12 basis points while the yields for 3, 6 and 12-month MTBs remained largely unchanged.

Weekly SPI data released by the Pakistan Bureau of Statistics (PBS) showed that Yearly growth in inflation had slowed down from over 20 percent in January to 15.97 percent as of Feb 20, 2020.

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