Karachi, November 25, 2022 (PPI-OT): Weekly Review
The uncertainty stemming from the appointment of the next Chief of Army Staff kept the market under pressure during the week, with the KSE-100 index ending the week at 42,937pts, having gained 0.48% from the previous week. Participation in the market remained lackluster, with daily average volumes traded clocking in at 159.58mn shares, compared to 186.3mn shares traded in the earlier week. Additionally, all eyes had been on the Monetary Policy decision on Friday, wherein the MPC decided to increase the policy rate to 16%.
Other major news flows during the week were; i) Forex reserves fell by $134m to $7.8b, ii) Fertilizer offtakes decreased by 50.3%YoY in Oct’22, iii) PkR965bn revenue collection target set for Dec’22 for Pakistan, iv) FDI fell 52% to US$348mn in 4MFY23, v) WB to give soft loan of $200m for green project, vi) Credit default swap shoots up to 92.53% on political unrest, and vii) SBP failed to set up $400m oil fund. Sector-wise, the top performing sectors were; i) Jute (+12%WoW), ii) Technology and Communication (+4.2%WoW), and iii) Transport (+3.7%WoW), while the least favourite sectors were; i) Power generation and distribution(-3.8%WoW), ii) Vanaspati and Allied Industries (-3.4%WoW) and iii) Cable and Electrical (-2.7%WoW). Stock-wise, top performers were; i) INDU (+7.8%WoW), ii) SYS (+7.2%WoW), iii) ENGRO (+4.3%WoW), iv) DAWH (+4.2%WoW), and v) PSEL (+4.1%WoW), while laggards were; i) HUBC (-6.7%WoW), ii) MUREB (-5.6%WoW), iii) FCEPL (-5.4%WoW), iv) FATIMA (-4.3%WoW), and v) KEL (-4.2%WoW). Flow wise, Individuals were major buyers with net buy of US$4.8mn, followed by Foreign Investors (net buy of US$1.1mn), while Mutual Funds were major sellers during the week, with a net sell of US$2.8mn. Insurance continued to be a seller, with a net sell of US$1.4mn during the week.
Outlook
The market is expected to remain range-bound in the near future, with the 100bps increase in policy rate announced on Friday to dampen the outlook for equity markets. Furthermore, the upcoming maturity of the International Sukuk of US$1bn will be in focus, with a positive outcome possibly restoring sentiment regarding Pakistan’s external position that would follow the same. Furthermore, any developments regarding the 9th review by the IMF would remain in the limelight. On the other hand, markets could further be pressured by the political uncertainty from the continuing long march – slated to reach Rawalpindi by November 26, 2022. Hence, keeping this in view, we prefer IT stocks and advise clients to stay cautious while building new positions in the market.