LAHORE: Pakistan Stock Exchange (PSX) is expected to stay range-bound and volatile to reign market week ahead in the backdrop of a trigger-less market, experts believe.
Experts believe that broader index is largely expected to follow international oil prices. Besides, clarity over furnace oil uncertainty of refineries’ handling and resumption of power plants would lay down a course of action of the energy further.
The market is expected to continue its search for triggers chain in the upcoming week as political headwinds take charge of affairs of most of the movement witnessed during the previous week’s strong mutual fund buying, which fizzled out during the week. Discouraging statements of elections over time and the ongoing court cases involving ex-prime minister, finance minister and Imran Khan have made a perfect blend of keeping investors cautious in making fresh decisions.
The macroeconomic front also kept on tedious as released trade deficit numbers posted a whopping increase of 31.24 per cent mainly on account of dull exports and rising imports. Keeping weak outlook into consideration, mutual funds and banks turned into net sellers of $16million and $4million worth of equities respectively.
Data pointed to watch out for current account number for October, textile exports data, and power generation numbers. Average traded volumes for the week further thinned to $106.05million against $113.84million during the previous week and foreign participation slightly went up with net inflows of $1.13million against net outflows of $1.78million previous week.
Key sector-related news-flow during the week consisted of the release of latest sales numbers by Pakistan Automotive Manufacturers Association (PAMA) whereby auto sales jumped by 24 per cent on a month-on-month basis to the highest ever monthly sales figure of 23,341units. PSO took a hit of negative 5.5 per cent during the week following news of an increase in receivables to Rs307bn and halt of furnace oil supplies, and a downward spiral in international crude oil prices following uncertainties expressed by International Energy Agency over talks of tightening fuel market.
The index remained dreary during the week amid lack of triggers and continued political uncertainty. A major development during the week was MSCI EM semi-annual review whereby Pakistan’s weight in the index was reduced to 0.09 per cent from 0.12 per cent in August 2017 following the downgrade of Engro Corporation (ENGRO) from MSCI EM Index to MSCI EM Small Cap index.
The index closed the week at 40,844 levels recording 1.4 per cent slip amid thin volumes.
Overall, advance to decline ratio reduced by 7 per cent while the average daily trading volume slipped down 15 per cent. Encouragingly, foreigners remained net buyers with a net inflow of $1.13million during the week. Conversely, mutual funds sold heavily, draining $16million from the market while insurance and companies remained net buyers for $8.1million and $5million respectively.
Stockbrokers were unanimous in saying that investors would keep on running around in circles until the dust on the political front settles down. They believe that investors were currently hunting for a fortune to book profits rather than to build fresh positions.
