Karachi, April 28, 2022 (PPI-OT): Weekly Review
Following the last week’s 1,049pts sell off, the market recovered 520pts on the first trading session this week on the back positive development with IMF. According to their spoke person, the IMF delegation is expected to visit Pakistan in May. In addition to this, the length of the program is also expected to increase till Jun’23 with additional US$2bn financing arrangement, taking the total program size to US$8bn. The upward movement, however, was short lived as the returns got trimmed in upcoming sessions when KIBOR reached 14-yr high to 14.1% and T-Bill yields reaching ~15%, hitting a 22-yr high. As a result, the benchmark KSE 100 index posted net decline of 304pts to close in at 45,249pts (-0.67%WoW).
On the flipside, ADT witnessed a growth of 25.6%WoW. Other news flow during the week included; i) Current Account Deficit swelling to US$13bn in 9MFY22, ii) IT exports increasing 29.3%YoY to US$1.9bn, iii) Miftah Ismail holding talks with key global investors, iv) portfolio allocations to six cabinet members, and v) 9MFY22 fiscal deficit widening to ~PkR2.6trn (4% of GDP). In addition to this, the technical level talks with IMF have also started under which the stress will be placed on the curtailment of CAD and other prior actions based on the latest data available. Sector wise, the highest gainers were Cable and Electrical Goods (+22.4%WoW) and Vanaspati and Allied Industries (+1.2%WoW). Close-end Mutual Funds declined the most (-14.0%WoW), followed by Synthetic and Rayon, down 5.3%WoW).
Stock wise, top performers were; i) LOTCHEM (+20.7%WoW), ii) NESTLE (+4.6%WoW), iii) BAFL (+3.0%WoW), iv) ABOT (+2.9%WoW), and v) BAHL (+2.2%WoW), while laggards were, i) DCL (-13.6%WoW), ii) KTML (-8.4%WoW), iii) MUGHAL (-7.3%WoW), iv) PTC (-7.1%WoW), and v) FFBL (-7.0%WoW). Volume leaders during the week were; i) HUMNL (96.59mn), ii) WTL (88.22mn), iii) TELE (66.46mn), iv) PRL (61.52mn), v) PAEL (47.47mn). Flow wise, Insurance companies emerged as the net sellers offloading US$6.71mn, followed by Mutual Funds (US$4.87mn) and Banks and DFIs (US$2.93mn). On the flipside, Foreign investors have accumulated shares worth US$3.17mn during the week. Similarly, Individuals and Companies remained on the buying side, with a net buy of US$5.78mn and US$2.98mn, respectively.
Outlook
After the downward correction faced by the market this week, we expect it to remain jittery in the near term. As the country settles into the new regime, economic policies are set to change, hence causing uncertainty in the market until things become clearer. News from IMF is bound to dictate market sentiments in the near term, with tough conditions being laid out for the country in the ongoing review. We continue to advise investors to accumulate on fundamental scrips with a long-term focus, and prefer the Refineries, Fertilizers and Chemicals sectors.