The index continued its upward trajectory and posted a gain of 3.2% WoW to close at 37,331pts. The positive momentum can be attributed to PM’s announcement of 0.3m subsidy for first 0.1mn homes in Naya Pakistan Housing Scheme, Initiative of SBP to allocate 5% of bank’s portfolio to the construction sector and finally inauguration of Diamer Bhasha Dam by the PM which spurred investor’s appetite in cements and steel sectors.

Furthermore, discovery of hydrocarbons in TAL block increased investor’s participation in the E&P sector. Improvement was seen in June’20 passenger car sales by 93%MoM and Oil and Gas Regulatory Authority (OGRA) determined 2-6% reduction in the prescribed prices of SUI twins for FY21. Economic numbers reported during the week also remained encouraging and supported market performance. Some of these include: 1) highest monthly remittances numbers (USD 2.5 Bn in Jun’20 vis-a-vis USD 1.6 Bn in SPLY); improvement in FX reserves (up 0.85% WoW to USD 18.9bn); and 3) further reduction in T-Bill cut-off yields in the range of 8-29bps. All these developments helped improve market sentiments during the week.

The participation improved by 426mn sh. (up 22% WoW) and ADTO surged by 99USDmn vs. 74 USDmn (35% up WoW). For the week, foreign investors continued to churn positions as the net sell clocked-in at USD27.4mn. This selling was mainly absorbed by individuals and insurance with inflows of USD15.9mn and USD14.3mn respectively.

Outlook

Moving forward, we opine that consistent declining trend in new COVID-19 cases and death ratio, stability in local currency backed by improved forex reserves and upcoming result season will set the direction of the market. Nonetheless, we are of view, that any dip in the market should be considered as an opportunity to accumulate fundamentally strong scrips. Our top picks include OGDC, POL, HBL, MEBL, LUCK, DGKC, FFC and EPCL. (BMA Capital Management Ltd.)