Stock Market Outlook: November to bring warmness

The Mint PK

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Stock Market Outlook: November to bring warmness

Pakistani Stock Market is all poised to gain long term positive momentum as Investors’ sentiment is likely to remain upbeat based on positive news flows.

Firstly from the Economic front, IMF has appreciated the Government for achieving a primary budget surplus and directive of using development funds as stimulus to revive growth. Moreover, inflation is expected to remain lower while the contraction in trade deficit is likely to continue as Imports remain suppressed.

Pakistan managed to keep the primary Budget surplus against the anticipation of Rs. 102bn in deficit. Moreover, In October-2019, the trade deficit declined by 35% YoY to only US$1.9bn while exports increased to 6% YoY.

Secondly, on the Political Front, the Protesting Party’s decision of not marching towards D-Chock would help to keep security situation in control. Though, market is not giving consideration to the on-going ‘Azadi March’ which is holding protest in Islamabad as KSE-100 has gained 2.14% during the last week. Moreover, With statement from DG ISPR emphasizing stabilization in the country, brings hope that the security situation will not deteriorate, hence strengthening the Government’s position.

A surprise increase in cement sales by 11% YoY during the month of October-2019 brings the sweetener as 4MFY19 Cement sales increase to 5% YoY.

Market Outlook

Going onwards, the Market is keeping a close eye on the October-2019 Inflation number where CPI is expected at ~10.7%. Lower inflation will help in determining interest rate outlook as Monetary Policy is due later in the month.

Technically, the KSE-100 is currently trading near the upper Bollinger band on the daily chart and making a higher high and higher low since the last three trading sessions. The 200-SMA on daily chart is currently lying near 35,400. The chart formation reflects that the index could find support near 34,100.

However, Analysts are still recommending to remain in defensive stocks and avoid cyclical stocks.

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