Karachi, August 19, 2022 (PPI-OT): Weekly Review
Weekly Review
KSE 100 index started the week on a promising note gaining 764pts on the first trading session backed by improving PkR against US$ by 0.34%WoW, news regarding monetary help coming from friendly countries such as Saudi Arabia, and impressive earnings posted by refineries and other sectors lifted investor’s confidence during the week and the benchmark KSE-100 index closed the week at 43,271 pts, up 0.96%WoW. The average trading volume for the index showed impressive growth, backed by boosting investors’ confidence and expectation that the IMF program will finally come into place after its executive board meeting scheduled to be held on 29th Aug’22, propelled average volumes to 519mn shares (51.4%WoW), as investors showed robust optimism.
Major news flows during the week were; i) The government has decided to present a mini-budget and lift ban on the import of luxury and non-essential items in compliance with IMF conditions, ii) SBP’s reserves up US$67mn to US$$7.9bn, iii) The government has planned to borrow PkR6.8tn from commercial banks over two months – August and September 2022, mainly to repay previous loans and to finance its budget deficit, iv) Pakistan’s services trade deficit widened 106% to US$5.2bn in FY22 from US$$2.5bn in FY21, v) Petroleum levy likely to increase to PkR50/liter, as per IMF, and vi) Pakistan may seek a 15-year LNG contract with Qatar on a G2G (government to government) basis.
Stock-wise, top performers in the KSE-100 were; i) HGFA (+12.4%WoW), ii) UNITY (+10.1%WoW), iii) PGLC (+9.7%WoW), iv KEL (+8.9%WoW), and v) SML (+7.5%WoW), while laggards were; i) PSMC (-9.8%WoW), ii) HCAR (-6.9%WoW), iii) NBP (-5.3%WoW), iv) PSEL (-4.9%WoW), and v) INDU (-4.7%WoW). Flow-wise, Insurance was the largest seller, offloading US$4.5mn followed by Banks and DFI (US$2.5mn). While Broker Proprietary Trading and Companies were on the buying side, with a net buy of US$7.2mn and US$2.5mn respectively.
Outlook
Monetary policy is scheduled to take place on coming Monday, AKD research expects the policy rate to rise by 50-100bps. The MPS decision is likely to drive the market’s momentum in the coming week. Furthermore, the results season continues, all eyes are on the earnings posted by scripts for the previous quarter. The market momentum will remain positive as we inch closer to getting IMF’s tranche of US$1.2bn. The currency market will also likely carry its current trajectory and PkR may gain further ground against the Greenback. We highlight Tech and Refineries sectors to outperform in the short run. Investors are advised to closely track the result announcements and can build positions accordingly.