Karachi, August 06, 2021 (PPI-OT): Weekly Review
Regaining momentum, KSE-100 index closed the week at 47,490pts, +0.9%WoW vs. -ve 1.54%WoW previously. Sentiments improved as a result of, positive news flows on Foreign Policy front where, i) high-ranking officials in the US Govt. acknowledged the important role Pakistan has to play in ensuring stability in Afghanistan, and ii) Saudi Arabia inviting PM Imran Khan to Middle East Climate Summit to be held in Oct’21, and encouraging macro developments with, i) FBR Jul’21 revenue collection of PkR413bn exceeding target by 21%, and ii) progress on implementing new power subsidy mechanism, igniting hopes of a successful IMF review in Sep’21.
Volumes also improved to avg. at 493.2mn shares – the highest in the past 4 weeks. Other important developments over the week were, i) Inflation decelerating to 8.4%YoY in Jul’21 compared to 9.7% in Jun’21, ii) Pakistan likely receiving US$2.8bn in Aug’21 under new allocation by the IMF, iii) COVID positivity rate surpassing 9% mark, taking avg. cases to +5k/day, iv) foreign inflows in Roshan Digital Account rising to US$1.9bn (US$307mn received in Jul’21), v) Century Steel (Pvt.) Ltd, a Chinese company investing US$360mn to set up 250k tons steel plant in Rashakai SEZ, KPK, and lastly vi) 13%YoY drop in local cement sales to 3.5mn tonnes in Jul’21 as a result of Eid holidays and higher rainfall in North region.
Sector wise performance demonstrates stronger gains in Textile Weaving (+7.0%WoW), and Glass and Ceramics (+6.6%WoW) while within major market sectors, Engineering (+3.6%WoW), and Textile Composites (+3.0%WoW) topped chart for the week. Flow wise, Foreigners became net buyers with inflow of US$3.1mn, followed by Individuals (net buy: US$7.6mn), which helped absorb profit-taking by Mutual funds (net sell: US$10.5mn), and Insurance companies (net sell: US$6.1mn). Top performers for the week were, i) HASCOL (+34.0%WoW), ii) STJT (+17.0%WoW), iii) HMM (+15.1%WoW), iv) GADT (+12.8%WoW), and v) SFL (+11.0%WoW), while laggards were, i) JDWS (down 8.2%WoW), ii) PSEL (down 7.5%WoW), iii) SCBPL (down 4.8%WoW), iv) UNITY (down 4.5%WoW), and v) AGP (down 2.8%WoW).
Outlook
COVID fourth wave with positivity ratio crossing 9% mark could dampen investor sentiments in the near term (Sindh authorities is likely to sit over the weekend to consider COVID situation in the province and associated measures, while Federal Govt. has also imposed restrictions on certain activities). Result season is likely to pick pace in the upcoming few weeks where surprises cannot be ruled out driving individual stock performance (Major results next week are, LUCK, EPCL, MCB, Attock Group companies, MEBL, and MLCF). We continue to advocate building positions in thematic plays such as in Cements, Steel, and Construction-Allied, and Textiles (on currency devaluation).