Karachi, June 18, 2021 (PPI-OT): Weekly Review

The KSE-100 index started the week in full swing with a bullish sentiment where the index gained 421pts on first day on account of reliefs announced in FY22 budget which includes a reduction in Capital Gain Tax (CGT) from 15% to 12.5%. The investor confidence was witnessed the most in; i) refinery sector in the backdrop of new refinery policy, ii) E and P sector on account of PkR118bn subsidy allocation, and iii) steel sector on the removal of CD, ACD and RD on import of HRC and stainless steel and PkR900bn PSDP allocation. The exultation over the budgetary measures slowed down following the first day where persistent issues drove investors to book profits which includes the FATF meeting scheduled on 21st June where Pakistan’s progress would be considered on implementation of action plans.

The KSE 100 closed the week at 48,239pts, down 0.14%WoW while the average daily volume clocked in at 1.049bn, down by 2.7%WoW. Other news flow during the week included, i) Shaukat Tarin’s statement on IMF Program to continue, ii) LSM output increasing by 12.84% in 10MFY21, iii) no new taxes imposed in provincial budgets of Punjab and Sindh, iv) G-20 putting off Pakistan’s US$3.7bn loan repayment, v) hike in petrol and HSD prices by PkR2.13 and PkR1.79 respectively, and vi) International oil prices at multi- year highs. Stock wise top performers include, i) ATLH (+9.7% WoW), ii) BYCO (+8.7% WoW), iii) PIBTL (+7.4% WoW), iv) AGP (+7.2% WoW), and v) OGDC (+7.1%) whereas the laggards were i) FATIMA (- 8.8% WoW), ii) SHFA (-6.0% WoW), iii) HCAR (-5.5% WoW), iv) PTC (-5.4% WoW), and v) FFBL (-4.9% WoW). Flow wise, individuals remained the major buyers with a net buy of US$21.43mn followed by mutual funds with a net buy of US$10.85mn while companies stood on the other side with a net sell of US$11.34mn followed by insurance companies with a net sell of US$6.65mn.

Outlook

For the upcoming week, all eyes will be set on passing of Finance bill in Senate and FATF plenary session starting on 21st June where Pakistan has fully implemented 26 out 27 points of the action plan. Going forward, we expect the bulls to re-emerge following the consolidation in market where as the reduction in CGT from 15% to 12.5% remains a positive trigger. We continue to like refineries in the backdrop of new refinery policy, steel and cement which are the major beneficiaries of development expenditure in PSDP and textiles on reduction in RD, CD and ACD on import of raw materials.