Investors cheer declining Covid-19 infections, anticipate lifting of lockdowns completely

The Pakistan stock market marked its fifth successive week in the green even though the rally lost steam mid-week as investors succumbed to profit-taking. The KSE-mo index posted gains of 276 points to dose at 37,608 points in the outgoing week. Investors had been euphoric over the sub-stantial rate cuts by the central bank and the upcoming monetary policy announcement once again brought equities to the forefront as the preferred asset class. Moreover, the declining trend in Covid-19 infections also spurred investors as hopes of end of lock-down attracted buying interest. Monday kicked off on a bullish note as participants took cue from last week’s trend and pushed the index higher. Activity was driven by investors cheering the low inter-est rate environment coupled with a surge

in foreign direct investment (FDI). FDI rose 88% to $2.56 billion in Pakistan in the pre-vious fiscal year (FY2o) compared to $1.36 billion in FY19, the State Bank of Pakistan (SBP) reported on Friday. Developments regarding the Diamer-Bhasha Dam and the housing scheme spurred buying interest in cement stocks. Additionally, the news of declining Covid-19 cases and deaths also boosted investor confidence. The uptrend continued in the following session as encouraging large-scale manu-facturing data bolstered investor sentiment and pushed the index upward. A bull-run in global stock markets gave further boost to investor confidence. Stocks extended the rally on Wednesday as traders indulged in alternative bouts of buying and selling. On the one hand, gains were tempered by anticipation of interest rate announcement, on the other investors cheered the relative stability of the rupee. Additionally, improvement in the cur-rent account deficit also strengthened in-vestors’ sentiments. The current account
0.74 Pakistan
Pakistani stock market against regionat peers


deficit had contracted by a massive 78% to $2.96 billion in the previous fiscal year. Developments about the Naya Pakistan Housing Scheme also fuelled buying inter-est in cement stocks. The tables turned on Thursday as the KSE-too index snapped the five-day winning streak and succumbed to selling pressure. Market participants resorted to profit-book-ing on fears of a disappointing corporate results season. Volatility marred the last trading day of the week on back of economic uncertainty and rising coronavirus. Although the over-all mood remained sombre and weak senti-ments wiped off some gains made earlier, the index finished in the positive territory. Participation dipped marginally as average volumes were down 3% week-on-week to set-tle at 413 million shares, while average value traded dropped 2% to dock-in at $97 million. In terms of sectors, positive contributions came from commercial banks (253 points), power generation and distribution (76 points), automobile assembler (31 points), textile composite (28 points), and technology


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and communication (17 points). On the other hand, negative contributions came from cements (6o points), oil and gas exploration companies (38 points), and chemical (19 points). Scrip-wise, positive contributions were led by HBL (128 points), MCB (64 points), HUBC (58 points), BAHL (35 points), and MTL (31 points). Foreign selling continued this week dock-ing-in at $9.3 million compared to a net sell of $27.4 million last week. Selling was witnessed in commercial banks ($2.9 million) and P&P ($1.7 million). On the domestic front, major buying was reported by companies ($7.3 mil-lion) and insurance companies ($7 million). Among major news of the week were; for-eign exchange reserves held by the SBP edged up, LSM declined by i.o% YoY during uMFY2o, government considers withdrawing gener-alised subsidies, two urea plants to start pro-duction on July 26 post gas supply resumption and World Bank will extend financing of $5oo million and Asian Infrastructure Investment Bank (AIM) will provide co-financing of $250 million for the RISE programme.

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