Karachi, September 30, 2022 (PPI-OT): Weekly Review

In the outgoing week, the KSE-100 index started the week on a robust note gaining 531pts, up 1.3% DoD on Monday as the broader market cheered the much-awaited arrival of Ishaq Dar into the policy-making of the country. As Mr. Dar was sworn in as Finance Minister on 28th Oct’22, appreciation of PkR against US$ was quite evident (+4.9%WoW) which helped the market gain positive momentum in the first three trading sessions of the week. Moreover, amidst all the chaos gripping the ongoing political turmoil where audio tapes leaked of political dignities couldn’t shatter investors’ confidence during the week.

Furthermore, the controversy surrounding allegations against the leading bank in the country also couldn’t able to drag the market down and the benchmark KSE-100 index closed the week on 41,129pts, gaining 1.25%WoW. The average trading volume for the index showed healthy growth of 20%WoW to 119mn shares. Major news flows during the week were; i) Ishaq Dar said the market intervention for the sake of the country should be realistic, ii) SBP’s reserves down US$341mn to US$$8.0bn, iii) The FBR is facing a gigantic task to collect around PkR120bn in the remaining two days of Sep’22 to meet the monthly target of PkR684bn, iv) The ADB will approve a US$1.5bn countercyclical loan for Pakistan next month to ease a worsening food crisis, v) Petroleum prices likely to decrease by PkR7.24 and PKR16.61 for petrol and diesel, and vi) Tax advisers and lawyers have approached the FBR to extend the date for filing of income tax returns up to Nov’22.

Stock-wise, top performers in the KSE-100 were; i) PAKT (+12.5%WoW), ii) PGLC (+11.9%WoW), iii) AGP (+11.8%WoW), iv PIBTL (+11.5%WoW), and v) NRL (+10.6%WoW), while laggards were; i) HBL (-13.9%WoW), ii) BNWM (-7.6%WoW), iii) IBFL (-5.2%WoW), iv) HGFA (-3.8%WoW), and v) ANL (-3.1%WoW). Flow-wise, Mutual Fund was the largest seller, offloading US$7.6mn followed by Insurance Companies (US$3.9mn). While Individuals and Other Organizations were on the buying side, with a net buy of US$5.5mn and US$2.9mn respectively.

Outlook

Inflation for the month of Sept’22 is estimated to clock in at 26.4% and 26.2% for the 1QFY23, MPS is expected to take place on 10th Oct’22 and FATF announcement is scheduled in the third week of Oct’22. The trajectory of the market is likely to be driven by these events as inflation is likely to remain elevated and a hike in the interest rate can’t be ruled out but seems unlikely which could keep equity market performance jittery. However, currency appreciation following the expectations of foreign inflows has kept the market sentiment robust. Therefore, we continue to advise a cautious approach while building positions in the market.