Karachi, November 05, 2021 (PPI-OT): Weekly Review
Extending rally for the fourth consecutive week, KSE-100 index closed at 47,296pts, +2.33%WoW – the highest weekly gain since May’21 as investors turned optimistic on a possible breakthrough in much awaited IMF review and the Govt. possibly regaining political capital through PkR120bn subsidy on key food commodities. Trading volumes also improved with avg. turnover standing at 429.7mn shares during the week compared to 219.1mn shares in the previous week – the highest in 8 weeks.
Other major news flows during the week were, i) FBR collecting PkR1.8tr during July-Oct’21, exceeding the target by PkR232bn with Oct’21 tax collection at PkR439bn (+33%YoY), ii) inflation up 9.2%YoY in Oct’21 on energy and food spike, iii) trade deficit narrowing 9.75%MoM to US$3.8bn indicative that the measures announced by authorities to curb non-essential imports are delivering results and would foster external account stability, iv) OMC sales +22% in 4MFY22 to 7.85mn tonnes, v) textile exports reaching an all-time high of US$6.0bln in July-Oct’21, and vi) yields on 3M Government paper increasing by 25bps leading to 127bps hike since last monetary policy showcasing market expectation of interest rate trajectory going forward. Sector-wise, within mainboards, Techs regained momentum +10.4%WoW followed by Engineering and Cements returning 5.5%WoW and 5.1%WoW respectively whereas overall, Jute and Refinery sectors stood as leaders with gains of 19.8%WoW and 14.6%WoW respectively.
Flow-wise, foreigners stood at net sellers, drawing out US$11.2mn along with Mutual Funds (net sell: US$6.3mn) which was mainly absorbed by Individuals (US$14.4mn), and Insurance Companies (US$6.5mn). Stock wise, major performers were, i) SFL (+42.1%WoW), ii) HASCOL (+22.2%WoW), iii) SRVI (+18.4%WoW), iv) SYS (+16.1%WoW), v) ANL (+14.5%WoW), while laggards were, i) STJT (down 12.5%WoW), ii) FML (down 11.7%WoW), iii) GATI (down 10.6%WoW), iv) PMPK (down 7.3%WoW), and v) THALL (down 4.3%WoW).
Outlook
Market sentiments should be driven by news flows relating to IMF review in the near term. Other key factors influencing market performance going forward are, i) Pakistan set to be reclassified into MSCI FM from MSCI EM where changes are to take effect by Nov-end, and ii) monetary policy which is due to be announced also towards the end of the month. We continue to advocate from thematic plays which include Banks (on monetary tightening), Construction-driven sectors (Cements, Steel), and Textiles (on devaluations and strong export prospects).