Karachi, February 01, 2023 (PPI-OT): Pakistan Strategy: Volatility in the Index, all eyes on IMF

While the KSE-100 index closed the month up by a meager 252.61pts or 0.62%MoM, it had dipped down to as low as 38,342.21pts earlier in the month.

Pressure in the index was largely driven by worries on the country’s external front and the Monetary Policy action, which was announced on January 23, 2022.

IMF remained in the limelight during the month, with the lender’s nod expected to unlock flows from other sources. Pakistan is in dire need of the same, with the FX reserves held by the SBP having dropped to US$3.7bn as of Jan 20, 2023.

Out of the major sectors, the E and P sector was at the forefront during the month, with the sector returning 7.4%. The sector’s gains were driven by OGDC and PPL, which returned 10% and 14%, respectively over the course of the month.

The market direction would be determined by the outcome of the IMF’s ninth review, expected to conclude on February 9, 2023. The demands put forward by the IMF may have inflationary impacts if implemented, which could keep the market in check.

We advise clients to take positions in those stocks that offer healthy dividend yields or have dollarized revenues, such as the Technology and E and P sectors.