LAHORE: Pakistan Stock Exchange (PSX) is expected to remain largely range-bound next week due to the unsupportive macro framework and current political scenario, which won’t help out a sustained rally, experts believe.
However, positive results at hand could ignite investors’ interest, that too with selected tags.
Market staged a strong recovery with expectations build over a bailout package last week announced by the government.
A potential Rs20-25 billion bailout package by the government for the stock market along with some tax reliefs was hinted at a meeting between the prime minister and the PSX officials and brokers’ delegation. The export package appears to have a positive impact upon corporate earnings growth.
The recovery registered as 5.6 per cent from its 12-month low as investors took advantage of attractive valuations after steep correction last week.
The positive sequence surrounding civil-military relations and Pakistan-US relationship was a major trigger at the start of the week. Rumours regarding a price increase by cement players, though later proven to be untrue, led to a rally in the sector by 11.4 per cent and also contributed to the index gain.
Other sectors that were counted as top performers included industrial metals and mining for 11.2 per cent and automobile and parts with7.3 per cent.
On the flip side, food producers took a dip of 0.5 per cent and electronics electrical goods 0.3 per cent. Market activity also witnessed a revival with the market participation rising by 27 per cent and 48 per cent to Rs 185million.
Foreign investors also seemed active, taking advantage of the rise in the index as evident from $ 4million net outflow during the week. Most of the outflow was witnessed in oil and gas with $5.1million and cement sector for $2.1million, whereas, fertiliser and power attracted inflows of $0.6million and 0.2million, respectively.
Most the outflow was absorbed by banks/DFIs with $9.2million and insurance companies for $3.6mn, which contributed major providers of liquidity to the market during the week. The commercial banks were key stragglers as overall profitability outlook of the sector remains depressed.
Moreover, there was optimism over macros too, as Foreign Direct Investment (FDI) too was up by 56 per cent in the 1st Quarter of fiscal year 17-18 and 7 per cent in the month of September; 65 per cent of the $662million FDI during the quarter originated from China compared to 32 per cent in the corresponding period last year. The government also borrowed $450million from commercial banks to boost its foreign exchange reserves by a net $381million from the previous week to $20.05billion. The growth outlook received a boost, as well as cotton production, so far as this season registered a growth of 37 per cent.
