Karachi, April 01, 2022 (PPI-OT): Weekly Review
Momentum gained in the previous week continued into this week with the index gaining 3.7%WoW – the strongest weekly return since Apr’20 – to close at 45,152pts. Participation also improved during the week, with avg. volumes at 310.1mn shares – the highest in 11W, with side scrips garnering investor attention (KSE-100/KSE-ALL ready volumes avg. at 37.7% vs. 42.8% in the previous week). We believe attractive entry points with end of political debacle insight and potential normalization in global commodity prices (TRJ commodities index down 4.0%WoW) precipitated investor action.
Major news flows during the week are, i) No-trust resolution against PM Imran Khan tabled in the National Assembly, ii) Punjab Chief Minister tendering his resignation to make space for a new Chief Minister possibly from PML-Q (PTI’s ally in the Centre and Punjab), iii) China rolling over US$2bn SAFE deposits, however, payment of China’s loan syndicated facility resulted in an outflow of US$2.9bn – resultantly FX reserves stood at US$12.0bn, iv) IMF still in talks with Pakistan counterparts over 7th review, v) Moody’s sees no-trust move against PM as credit negative, vi) NSS rates jumped up to 100bps across different instruments, vii) FBR registers 29% growth during July-March’22 despite massive tax relief, viii) PSO’s circular debt is in an alarming state, standing at PkR658bn, ix) Govt. pushing cash-strapped refiners to bump up output, and x) Foreign investors pulling out US$397mn from capital markets in Mar’22. Sector wise, amongst major sectors Engineering topped with a gain of 9.6%WoW, followed by Techs (+5.8%WoW) while E and Ps stood largely unchanged (+1.0%WoW) whereas across all sectors Vanaspati and Allied Industries and Refineries gained 6.8%WoW and 6.2%WoW respectively – the most after Engineering sector.
Flow wise, Foreigners sold US$15.5mn (net) with the most being in Banks (US$13.7mn), along with mutual funds (net sell: US$5.2mn) which was absorbed by Banks (net buy: US$15.7mn) and Individuals (net buy: US$7.5mn). Top performing stocks for the week were, i) ANL (+16.3%WoW), ii) IGIHL (+15.1%WoW), iii) DGKC (+14.7%WoW), iv) NRL (+11.7%WoW), and v) PIOC (+11.1%WoW), while laggards were, i) COLG (down 3.9%WoW), ii) SRVI (down 3.9%WoW), iii) ATLH (down 1.8%WoW), iv) ABL (down 1.4%WoW), and v) EFERT (down 0.5%WoW).
Outlook
Market is likely to tread political developments in the near term however, ease-off in global commodities would provide episodes of gains. Ramadan season might keep market activity dry however commencing of result season could bring investor interest in specific stocks. We continue to advise investors for building long-term positions, limiting short-term trading. For long-term accumulation, we advise taking positions in Banks (MCB, FABL, BAFL), Cements (LUCK, MLCF, CHCC, FCCL), Techs (SYS, AVN), Steel (MUGHAL, ASTL, ISL), and Refineries (ATRL, NRL).