IMF, earnings take center stage

After the market closed positive in teh last two sessions of the outgoing week, investors will get a better picture of reality next week as the pace of corporate reporting earnings picks up.

They are also likely to gauge whether more volatility is ahead because of surging fuel prices, which could drive up inflation, erode profit margins and pressure consumer spending.

A successful review talks with IMF on bailout programme could bring bulls back to the trading floor.

“As we get closer to resuming the IMF program and receiving a $1 billion tranche, we expect the market to perform well in-tandem,” brokerage Arif Habib Limited said in a market report.

"Whereas recent bouts of selling at the index have once again opened up valuations; we advise investors to cherry-pick blue-chip stocks with a long-term focus,” the report said.

“Key short-term risks include regional volatility and the ensuing security concerns, together with rupee depreciation.”

During the last two sessions of the week, the market performed well. The market closed at 44,821 points, gaining 344 points, up by 0.8 percent week-on-week. Average volumes clocked in at 342 million shares (up by 29 percent week on week) while average value traded settled at $71 million (up by 20 percent week on week).

Foreign selling continued this week, clocking in at $13.3 million compared to a net sell of $3.7 million last week. Major selling was witnessed in the fertilizer sector ($12.1 million), commercial banks ($7.8 million), and cement ($3.11 million).

On the local front, buying was reported by insurance companies ($12.2 million) followed by mutual funds ($3.4 million).

The Arif Habib Ltd report said the benchmark equity bourse closed in the green after four weeks of bleeding.

During the early part of the week, investors resorted to panic selling amid a lack of clarity on the continuation of the IMF package as well as delay in the process to appoint a new director-general of the ISI.

Albeit, with finance minister assuring that the government would soon address concerns of the global lender and resume the IMF’s EFF, as well as Prime Minister's statement allaying any rumors of a military-political divide, the benchmark index posted two swift back-to-back bull runs.

AKD Securities research said the feel good factor returned as the weekly performance of the index closed in green.

Commercial Banks emerged as the outperformers during the week amid increased likelihood of further rate hikes in the up coming monetary policy meeting , gaining 3.6 percent week-on-week

Cement sectors, up 2.0 percent week-on-week owing to revision in prices. Cement prices increased by Rs35-45/bag to RsR690-710/bag whereas automobile sales jumped 68 percent year-on-year to 82,000 units.

Sector-wise positive contributions came from commercial banks (393 points), oil & gas exploration companies (136 points), fertilizer (123 points), cement (98 points), and pharmaceuticals (28 points). Scrip-wise positive contributors were HBL (153 points), PPL (87 points), UBL (67 points), LUCK (59 points), and OGDC (42 points).

Sectors, which contributed negatively, included technology & communication (342 points), and food & personal care products (50 points).

Scrip-wise negative contribution came from TRG (260 points), SYS (70 points), and PAKT (27 points).