After shedding 362 points (-0.8 percent) during the last week amid the Financial Action Task Force (FATF) plenary session, the Pakistan Stock Exchange (PSX) is likely to remain in green this week as clouds of FATF-led uncertainty have dispersed.
Moreover, a ceasefire at the Line of Control (LOC) agreed upon between the director generals military operations (DGsMO) of Pakistan and India may further boost investors’ sentiments.
Again falling gold prices, stability of Pakistani rupee against the US dollar and increasing prices of crude futures may keep the market green this week.
Gold price in the international market plunged and it was closed at $1,735.60 an ounce on Friday last after shedding $35.50 an ounce in its value as compared to its value on Thursday last. International ratings agency Fitch has predicted the price of gold will fall to $1,600 per ounce this year and slide further down to $1,400 in 2022 “on increased demand due to investment flows and central bank purchases.”
Pakistan rupee was appreciated by Re1 against the US dollar during the week. The local currency made gains against the greenback during the all five days.
On the other hand, oil prices are trading at 14-month high as the US West Texas Intermediate (WTI) crude futures was closed at $61.50 a barrel, Brent at $64.42, the price for Opec Basket was recorded at $65.42, and closing price of Arab Light remained $65.14.
According to the latest outlook by Morgan Stanley, prices for Brent crude will reach $70 per barrel in the third quarter on “signs of a much improved market.” At the same time, Goldman Sachs Commodities Research says that prices will climb to $70 per barrel in the second quarter from the $60 it previously predicted, and $75 in the third quarter from $65 earlier.
The benchmark KSE-100 Index closed at 45,865.02 points last week against its closure at 46,227.65 points on the preceding week. Among other indices, the KSE All Share Index closed at 31,436.15 points against its closure at 31,851.18 points on a week-on-week (WoW) basis. Likewise, the All Share Islamic Index closed at 22,806.72 points against 23,041.25 points on a WoW basis.
Analysts at Arif Habib Limited said that the market to remain positive in the upcoming weeks as clouds of FATF-led uncertainty have dispersed and with only 3 action plans to be addressed, the likelihood of Pakistan exiting the grey list in June 2021 are very bright. Moreover, a ceasefire across the Line of Control (LOC) with India is a massive feat on the political front and will further aid stability in the regional climate.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.2x (2021) compared to Asia Pacific regional average of 17.1x and while offering DY of ~6.8 percent versus ~2.5 percent offered by the region.
The index remained under pressure this week in anticipation of FATF’s plenary meeting (scheduled 22nd to 25th February 2021), whereby Pakistan retained its status in the Grey List and has until June 2021 to meet 3 of the 27 initial action points. Albeit, a relief rally was witnessed on Thursday as valuations opened up and a robust dividend announcement from UBL lured bulls.
Moreover, another current account deficit (CAD) was posted in January 2021 at USD 229 million in January 2021 versus USD 652 million in December 2020 while FDI for 7MFY21 underwent a 27 percent dip YoY to USD 1.145 billion compared to USD 1.577 billion in SPLY.
Sector-wise negative contributions came from oil & gas exploration companies (107 points), commercial banks (105 points), and oil & gas marketing companies (78 points). Whereas sectors that contributed positively include cement (119 points), technology (53 points), and textile weaving (7 points). Scrip-wise negative contributors were OGDC (92 points), PSO (42 points) and NBP (41 points) while positive contributors included LUCK (160 points), TRG (56 points) and MEBL (28 points).
Foreign buying this week clocking-in at $0.3 million compared to a net sell of $0.6 million last week. Buying was witnessed in cement ($2.6 million) and technology and communication ($2.2 million). On the domestic front, major selling was reported by Broker Proprietary Trading ($10.7 million) and Mutual Fund ($4.9 million). Average volumes arrived at 589 million shares (down by 1 percent WoW) while average value traded settled at $159 million (up by 0.01 percent WoW).
