Karachi, April 08, 2023 (PPI-OT): Weekly Review

Market remain volatile over the course of the week owing to the economic uncertainty, further exacerbated by political tension that persisted throughout the week within the country. However, the market showed some resistance, and moved into positive territory come Wednesday when the SBP hiked rates by lesser than expectations, raising it by 100bps to 21%, while market expectations were for a 200bps increase. Additionally, news flows of a Saudi Arabia assurance of US$2bn primarily helped boost investors’ confidence.

Meanwhile, the news of the cancellation of a finance ministry’s earlier planned visit to the USA for IMF and World Bank spring meetings, once again shattered investor confidence, resulting in the market closing in the red on the last trading session. Overall, KSE100 index closed with a 49pts increase at 40,049.65pts on Friday, depicting an increase of a mere 0.12%WoW. Moreover, participation in the market witnessed improvement, increasing by 19.4%WoW, and the average volume reported at 110.2mn, which was 92.3mn last week. Other major news flows during the week included; 1) Country’s Forex reserves fall by US$56m, 2) March inflation soars to 35.4pc, highest since 1965, 3) China has rolled over $2bn loan, Dar tells Senate, 4) Jul-Mar trade deficit shrinks 35.51pc to $22.9bn YoY, 5) Govt Raises Rs. 2.24 Trillion Via T-Bills, 6) July-March: FBR suffers massive shortfall of Rs304bn. Sector-wise, Modarabas, Woollen, and Miscellaneous were amongst the top performers, up 4.1%/3.8%/3.2%WoW respectively. On the other hand, Tobacco, Leather and Tanneries, and Close-end Mutual Funds were amongst the worst performers with a decline of 11.6%/7.3%/4.6%WoW.

Flow wise, major net selling was recorded by Insurance companies with a net sell of US$4.8mn. On the other hand, Individuals absorbed most of the selling with a net buy of US$2.7mn. Company-wise, top performers during the week were, i) SML (up 7.2%WoW), ii) PSEL (up 6.1%WoW), iii) FATIMA (up 5.9%WoW), iv) EPCL (up 5.8%WoW), and v) BNWM (up 3.8%WoW), while top laggards were, i) PAKT (down 10.1%WoW), ii) MUREB (down 8.5%WoW), iii) AIRLINK (down 6.6%WoW), iv) EFUG (down 6.3%WoW), and v) HCAR (down 6.0%WoW).

Outlook

Market is expected to remain jittery until there is a clear picture on the IMF front, as the news of the cancellation of the IMF visit has further added to the uncertainty in this matter. In addition, if political tension settles, the market’s confidence may also be restored. Until then, we advise investors to take a cautious approach while building positions in the market and we continue to advocate the stocks with dollar-denominated revenue streams, i.e.; Technology and E and P sector, to hedge against the currency risks.