Political hammering, external account measures to drive PSX next week

LAHORE: Political hammering and government measures to ease external account vulnerability would drive Pakistan stock exchange (PSX) next week. In addition, upcoming semi-annual review of MSCI EM index will be a leading architect in setting the sentiments.

Experts believe that mutual funds and individuals participation levels would be elevated, a realigning year ahead of portfolios.

Experts perceive sideway movements in the broader index that got recovery of lost ground despite a fluid political landscape and weak news flows during the week. The PSX climbed 0.91 per cent up on closing the week at 41,436pts. Additional excitement over strong automotive sales kept OEMs in the limelight, whereas upward momentum in crude oil prices kept refiners under pressure.

PSX started the last week on a lacklustre note as most investors were distracted by developments in domestic politics with an accountability court resuming separate hearings on corruption references against ex-PM Nawaz Sharif and Finance Minister Ishaq Dar. However, the market saw higher interest on Thursday following the positive sentiment generated by waiving off the requirement for equity mutual funds to maintain a minimum 5 per cent of assets in cash.

The regulatory change expected to result in a fresh liquidity injection into the course. Market concluded the week in green by gaining 372 points where participation stayed thin as investors preferred on the sidelines waiting for the political dust to settle down. Overall, advance to decline ratio reduced 2.5 per cent to 114 million shares while ADTV declined by 11.7 per cent to reach $ 114 million, during the last week.

Volume leaders at the bourse were PAEL with 49.81 million, JPGL 41.86 million, SSGC 38.86 million, ANL 27.37 million and SNGP for 25.74 million. Major inflows of $ 17.3 million were witnessed from Mutual Funds, while Banks and Insurance remained net sellers for $ 6.6 million and $ 2.4 million, respectively. Meanwhile, foreign investors offloaded $ 1.8 million worth of equities during the week.

On the sectoral front, E&P remained in the limelight that gained 2.3 per cent, as Arab light crude benchmark for Pakistan rose 4.5 per cent during the week backed by events in Saudi Arabia, where the authorities attempted a high-profile corruption purge that pushed up global crude prices. Automobile also garnered investor attention pushing it 4.2 per cent up as investors were expecting a positive surprise in monthly automobile sales number due to be released next week.

On a standalone basis, KAPCO was restricted by WAPDA, a major shareholder with 40 per cent stakes, entering into a share-purchase agreement (SPA) with Dawood Hercules. However, would not have a major impact on its valuation.

On the macro front, remittances impressive growth of 28 per cent improved by 1.5 per cent on year on year basis. On other hands, Pakistan’s total liquid foreign exchange reserves witnessed an increase of 0.35 per cent to $ 19.9 billion.

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