Karachi, October 29, 2021 (PPI-OT): Weekly Review

Following the momentum from last week, the market remains jittery in the first two sessions where it shed 351pts owing to uncertainty over the ongoing IMF review. In the third session, the market strongly rebounded by 564pts as the inflow of US$3bn from Saudi Arabia penetrated like a ray of light enters in despair, instilling confidence in investors. As a result, the local currency appreciated 1.4% against the US$ in the intraday session to close at PkR172.6/US$. In addition to this, IMF allowed Pakistan to utilize US$2.78bn for meeting the budgetary side requirements which were provided by the fund for combatting the Covid-19 pandemic further fueling the positive momentum. The benchmark KSE-100 index gained 641pts in the outgoing week to close at 46,219pts, depicting a growth of 1.41%WoW.

Despite the positive outlook, the average weekly volume remained substantially low at 305.96mn (vs 341.88mn in previous week (-10.5%WoW) owing to inefficiencies in the newly implemented trading system at PSX. Other news during the week included; i) Pakistan and Japan agreeing to defer debt payments of US$200mn, ii) Urea offtake jumping 24%YoY in Sep’21, iii) Qatar to invest in Pakistan’s upcoming LNG terminal, iv) Power div seeking PkR134.8bn TSG to clear IPP’s dues, v) total foreign loans hitting US$3.2bn, and vi) Jul-Aug fiscal deficit standing at 0.9% of GDP.

Top performers of the market included i) PKGS (+14.6%WoW), ii) SHFA (+12.5%WoW), iii) PIOC (+10.8%WoW), iv) ISL (+10.6%WoW), and v) INIL (+10.4%WoW) whereas laggards included: i) SEARL (-22%WoW), ii) SFL (-15.5%WoW), iii) LOTCHEM (-8.3%WoW), iv) GATI (-7.5%WoW), and v) PSX (-6.9%WoW). Flow wise, Other Organizations remained the major buyers with (net buy of US$1.7mn) followed by Insurance Companies (net buy of US$1.32mn) while Foreigners stood on the other side with (net sell of US$2.68mn) followed by Individuals (net sell of US$1.05mn).

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.