Karachi, November 04, 2022 (PPI-OT): Weekly Review
The bourse witnessed an overall volatile week as the political instability raged on, squeezing investor confidence and overall volumes alongside it. Participation in the market remained lackluster, with daily volumes averaging ~240mn shares during the week. The benchmark KSE-100 Index gain 716points during the week, depicting a 1.74% rise in the index. The PkR continued to lose value against the US$, devaluing by 0.25% over the course of the period. CPI once again came in higher on Wednesday, clocking in at 26.56%YoY for Oct’22 as spikes from the unwinding of relief from fuel tariff adjustments and rising food prices bore effects.
Finally, Trade deficit for Oct’22 stood at US$2.3bn, down 42%YoY, while SBP’s FX reserves stood at US$8.9bn on 28-Oct’22. On the international front, US FED increased its rates by 75bps (Fed funds rate: 3.75-4.0%) on Thursday, which pushed the oil back, as the global commodity continued to rage upwards due to lower than expected US inventory data and reports of Chinese pullback on COVID curbs.
Other major news flows during the week were; i) PM is scheduled to fly to China tomorrow (Tuesday) on a two-day visit to hold talks with Chinese leadership on “bilateral, regional and global issues.”, ii) Prime Minister Shehbaz Sharif on Monday announced Rs1,800 billion relief package for farmers, iii) Prime Minister Shehbaz Sharif arrived in Beijing on Tuesday to meet Chinese leaders and discuss plans for the China Pakistan Economic Corridor (CPEC), iv) The country’s power sector’s circular debt is reportedly touching Rs 2.6 trillion mark at present against Rs 2.252 trillion on June 30, 2022, v) Former Prime Minister Imran Khan was shot in the shin on Thursday when his anti-government protest convoy came under attack in the east of the country in what his aides said was a clear assassination attempt. Company-wise, amongst mainboards, BNWM, TRG and SNGP companies were amongst the top performers, up 13.8%/ 9.3%/ 7.7%WoW respectively.
On the other hand, AICL, NESTLE and IGIHL was amongst the worst performers with a declines of 5.6%/4.2%/4.0% WoW. Flow wise, major net selling was recorded by Insurance companies and Mutual funds (net sell: US$4.63mn). On the other hand, Individuals absorbed most of the selling with net buy of US$4.68/mn. Sector wise top performers were i) WOLLEN (+13.8%WoW), ii) TOBACCO(+6.0%WoW), iii) OMCs (+5.7%WoW), iv) TECH and COMM (+5.0%WoW), and v) SUGAR (+4.0%WoW), while top laggards were, i) VANASPATI (down 3.9%WoW), ii) FOOD and PERSONAL CARE (down 2.1%WoW), iii) LEASING CO. (down 2.0%WoW), iv) INV. BANKS/INV. COS. (down 1.8%WoW), and v) COMM. BANKS (down 1.0%WoW).
Outlook
The market is expected to remain range-bound in the near future, as pressure on the PkR continues to be a cause for concern in the capital markets. Furthermore, the long march, and the ensuing political uncertainty, is expected to keep market movements in check. Moreover, the economic slowdown in the country-an intended outcome of the SBP’s contractionary policies-and the adverse effects of the floods are likely to keep corporate earnings in check going forward. Hence, we advise clients to stay cautious while building new positions in the market.