Karachi, December 03, 2021 (PPI-OT): Weekly Review
The feel-good factor of the market returned on Monday with KSE-100 gaining 1,216pts amid ease off in global commodity prices. However, market sentiments went downhill very quickly amid higher than expected CPI of 11.5% in Nov’21, sudden spike in T-bills yields waving concerns of further monetary tightening and stupendous trade deficit of US$4.9bn (+134%YoY) in 5MFY22 caused an excessive selling in the market which shook investor’s confidence. Apart from macro indicators, political uncertainty, rising electricity rates and ambiguity over talks of resumption of stalled IMF program still linger on. As a result, the benchmark KSE-100 index lost 881pts during the week to close at 43,233pts, down 2.0%WoW. Participation during the week was strong with average daily traded volume standing at 319mn shares against 264mn shares witnessed during last week.
Sector-wise, flat steel manufacturers decreased CRC prices by PkR8K/ton to PkR236K/ton due to decline in HRC prices of 12.1%MoM in Nov’21. Other major news during the week were, i) Financial Action Task Force (FATF) appreciated significant progress made by Pakistan to strengthen the counter-terrorist financing measures, ii) The FBR exceeded its sought target by PkR0.3tn and collected PkR2.3tn (+14.1%YoY) in 5MFY22, iii) Nov’21: POL sales clocked in at 1.75mn tons with an increase of 2%YoY, iv) 3M T-Bills cut-off yields jump 228bps to 10.79%, v) ECC granted an increase in OMCs’, petrol dealers’ margin, and vi) The FBR has prepared a mini-budget based on conditions set by the IMF by proposing a reversion of PkR350bn tax relief on multiple products including mobile phones and imported vehicles. Stock wise, major performers were, i) SFL (+8.1%WoW), ii) JDWS (+7.1%WoW), iii) PSO (+6.2%WoW), iv) STJT (+6.0%WoW), v) FATIMA (+4.1%WoW), while laggards were, i) AGIL (down 16.5%WoW), ii) ATRL (down 13.7%WoW), iii) UNITY (down 12.1%WoW), iv) TRG (down 10.9%WoW), and v) GATI (down 10.4%WoW).
Outlook
Market is going to watch host of events closely where ease-off in global commodity prices could be crucial in slowing down the monetary tightening amid uncertain macro-economic conditions. Additionally, next MPS is schedule to take place in the third week of Dec’21 which could significantly influence market’s performance and direction. Moreover, year-end phenomena could act as a catalyst for the index gaining upward momentum, going forward. We continue to advocate for thematic plays where we like Banks (on monetary tightening), Cements (reduction coal prices improving earnings outlook), and Power and select-OMCs (PSO) on circular debt payments.