Distributive policy

Weekly review: monetary policy decision likely to dictate the market

KARACHI: The next monetary policy decision scheduled for August 22, 2022 should dictate the stock market over the next week.

Analysts at Arif Habib Limited said key events to watch include the monetary policy meeting due next week which is expected to dictate market direction.

READ MORE: Weekly review: the stock market should move into positive territory

Analysts believe that the State Bank of Pakistan (SBP) could keep its key rate unchanged at 15%.

Given the current earnings season, certain sectors and scrips are likely to remain in the limelight. Moreover, the stability of the Pakistani rupee against the greenback will keep the sentiment bullish.

The Pakistan Stock Exchange (PSX) benchmark KSE-100 index is currently trading at a PER of 4.4x (2022) against the Asia-Pacific regional average of 12.5x while offering a dividend yield of 8.8% against 2.8% offered by the Region.

READ MORE: Weekly review: Market should continue to see positive sentiment

The bulls dominated as the market opened this week on news flow from Saudi Arabia seeking to roll over $3 billion in deposits as well as additional support worth $100 million a month in terms of oil supply, which took the market above the 43,000 level.

Additionally, Large Scale Manufacturing (LSM) data shows an 11.7% year-over-year jump in fiscal year 2021/2022.

However, profit taking started mid-week as news of possible PKR 50 billion taxes to be imposed by the government also dampened market sentiment.

READ MORE: Pakistan stores 671 points on continued rupee gain

Moreover, the Pak Rupee again saw some depreciation against the USD.

The market closed in the green zone at 43,270 points, up +413 points or 0.96% WoW.

Positive sectoral contributions come from i) banking (164 points), ii) cement (123 points), iii) technology (94 points), iv) power generation and distribution (45 points) and v) food and personal care products (38 points).

While the sectors that contributed negatively are i) E&P (74 points), ii) WTO (29 points) and iii) Automotive assembly (23 points). Positive contributors at certificate level were HBL (101 points), LUCK (85 points), ENGRO (70 points), MEBL (65 points) and SYS (61 points).

READ MORE: Pakistani stocks gain 357 points as rupiah continues rally

Meanwhile, the negative certificate contribution came from PPL (45 points), OGDC (44 points), FFC (42 points), PSEL (38 points) and UBL (29 points).

Foreign sales continued this week, reaching $2.78 million, compared to a net sale of $0.88 million last week. Significant sales were observed in Cement (3.37 million USD) and Banks (1.30 million USD).

On the local front, buying was reported by Broker Proprietary Trading (USD 7.23m) followed by corporates (USD 2.48m). Average volumes reached 519 million shares (up 51% on WoW) while the average traded value was $57 million (up 18% on WoW).