Karachi, October 22, 2021 (PPI-OT): Weekly Review
In a shorter than usual week, market remained volatile where the start of the week witnessed across the board selling as investors became jittery on the news that IMF talks remained inconclusive. However, once a clarification was published that negotiations are still going on, market took a sigh of relief on second day of the week and increased 1.9% in a day.
The same momentum was carried into third trading day however on the fourth day, news flow regarding IMF discussions again caused jitters and a sell-off was witnessed. KSE-100 closed the week at 45,578pts, up 1.69%WoW.
Commercial Banks remained amongst major performers for the week as increasing inflation and depreciating exchange rate infused expectations of a rate hike. To note, yields of 3M T-Bill increased by 40bps in the latest auction.
Increasing oil prices on the back of global energy crunch instilled fuel into oil and gas exploration sector with the sector posting an increase of 2.1% during the week. One of the major beneficiaries of depreciating exchange rate is the textile sector and the same resulted in sector posting a positive return of 2.7% for the week.
Foreigners remained on the selling side during the week, posting a net sell of USD12.8mn; major part of this selling was absorbed by insurance with a net buy of USD6.49mn. Avg. daily traded volume during the week decreased by 10.5%WoW to 306mn shares.
Other news flow during the week included: i) Government announcing a countrywide uniform increase in base electricity tariff, ii) Large-Scale Manufacturing (LSM) posting a growth of 12.74%YoY in Aug’21,, iii) Pakistan’s current account deficit narrowing to USD1.1bn in Sep’21, and iv) Government planning to issue a Panda bond by March 2022.
Stock wise gainers were, i) AICL (+13.6%WoW), ii) UBL (+9.8%WoW), iii) KOHC (+9.8%WoW), iv) EPCL (+9.0%WoW), and v) HBL (+9.0%WoW), while laggards were, MTL (down 18.8%WoW), JDWS (down 9.2%WoW), GHGL(down 8.1%WoW), HCAR (down 7.8%WoW), and v) KAPCO (down 7.7%WoW).
Outlook
Market is going to watch a number of events closely where ongoing negotiations with IMF remain paramount and an agreement there will prove to be a significant stimulus for the market. However, political arena is also heating up with opposition parties staging protest across the country.
Even though protests in their current form will largely be a non-event from stock market’s vantage, any escalation in tensions can weigh heavily over the market. Lastly, notification of DG ISI’s appointment is still awaited which again will be a significant trigger for the market, in our view.