Stocks seen range-bound next week

KARACHI: The Karachi share market would remain range-bound next week as there will be fewer developments to keep the index in positive territory, analysts said on Saturday.

“With the commencement of the upcoming quarterly results season, the market will be looking for positive news backed by better-than-expected corporate earnings,” said Saeed Khalid, an analyst at Invest Capital.
“However, the rift between the government and the judiciary is expected to play a significant role in keeping the market sustains the current levels.”


The KSE-100 Index gained 1.7 percent during the week ended on October 15 to close at 10,432 points.
The average daily volume declined by two percent to settle at 90 million shares during the week.

Analysts said that the reason behind 1.7 percent return was due to settlement of their positions by investors ahead of the upcoming quarterly corporate results season.

Sana Hanif, an analyst at JS Global, said that investors opted for a cautious stance throughout the week due to apprehensions over the Supreme Court’s verdict on the National Reconciliation Ordinance (NRO).

“Similarly, weak economic data such as higher than consensus inflation of 15.7 percent and 28.5 percent fall in the net foreign investment inflow during the first quarter also kept investors on the sidelines. Even positives such as upward revision in gas wellhead prices and robust remittances data for July-Sept failed to trigger investors’ interest.”

Finance Minister Dr Abdul Hafeez Shaikh met the officials of the International Monetary Fund (IMF) and the World Bank (WB) and although no major development came to the forefront, the IMF has hinted that it may relax the fiscal deficit target by 0.7 percent and may disburse $1.8 billion by December upon successful completion of the reforms.

During the week, Oil and Gas Regulatory Authority (OGRA) raised the wellhead gas prices for 21 fields.
The revision was broadly in line with the expectations and the E&P stocks witnessed a rally throughout the week.

Additionally, the Textile Ministry requested the European Union (EU) to include additional 15 home textiles and garment items to its tariff waiver list for exports. However, this too failed to generate activity in NML, though NCL gained 3.7 percent.

Lastly, a 30 percent reduction in the public sector development programme (PSDP) proved to be a sentiment dampener for the cement sector. With the onset of the results season, the market could witness some pre-result rally.

Open interest position during the week increased by a notable 100.6 percent to stand at Rs991 million. Futures spread increased by 3.58 percent, while futures volumes stood at 2.99 million shares, increasing by 114 percent.

The Top-5 scrips, constituting 76 percent of the total open interest, included Pakistan State Oil (PSO), MCB Bank Limited, Oil and Gas Development Company (OGDC), ENGRO and the National Bank of Pakistan (NBP).

Mohammad Rameez, an analyst at Elixir Securities, said that the equities closed the week marginally positive with the market depicting resilience against continued political noise.

“Traders remained focused over developments on the government and Supreme Court rift, however, flows driver momentum kept the market in the green all the way through.”

“Given the strong recent performance from the market, we believe investors will look for reinforcing factors to vet the excitement. Despite the delays, progress on reintroduction of leverage product remains a key trigger and any development on the same should be welcomed by the market,” a report issued by KASB Securities suggested.

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