The last day of the week showcased movement with significant activity seen in Cement and Steel scrips. The infection ratio seven-day moving average has declined by 10% WoW to 7.1%. However, daily readings should be closely monitored for another potential outbreak. The primary trigger for activity in the market is the Jun ’21 result season, which is currently underway.

Experts recommend investors to accumulate positions in the Fertilizers, Banks, Autos, and Cement sectors as these sectors are likely to perform as market activity improves.

In a concluded week on Friday, the index remained inactive for most of the week due to the Moharram holidays, with modest activity witnessed on the last day, wherein cement and steel scrips drove the market to close at 47,600ppts (↑0.9% WoW). The improvement in FATF compliance, positive Roshan digital account inflows, and the setup of the new Afghan government was important news that kept investors engaged during the week. The index hit high and low of 47,644 ppt and 46,672 ppt during the week. The average traded volume declined by 13% WoW to 266 Mn shares, while the traded value decreased by 4% WoW to average at USD 70 Mn.

FATF ranking, Roshan digital account inflows, foreign interest in T-bills and highest Forex reserve expectations were positive triggers during the week:

The fall of establishment in Afghanistan and low volumes kept investors concerned: The collapse of the Afghan government and the president’s escape left the country in a difficult situation. The vacuum now filled by the Taliban has investors concerned about the geopolitical condition of the region, with Pakistan facing the most uncertainty. Contrary to popular opinion, the formation of the government and trade pickup at Torkham, Chaman, Kharlachi and Ghulam Khan border has moved at a peaceful and stable pace. Despite the result season, investor volumes were lukewarm due to market closure during Moharram and a general lack of trigger.

Data released during the week which kept the market flowing included: 1) Large Scale manufacturing numbers for Jun ’21 and FY21, which increased by 18% MoM and 15% YoY to 145.2 points; 2) Foreign direct investment (FDI) for Jul ’21, which fell by 38.7% YoY to USD 90M, and 3) Roshan Digital account inflows, which rose to USD 2Bn on 13th August 2021.

Courtesy – BMA Capital Management Ltd.