Karachi, April 20, 2023 (PPI-OT): Weekly Review

Market showed an overall positive momentum over the week as KSE100 Index gained 802points during the last four trading sessions to close at 41,008. Same wise, participation in the market witnessed improvement on the weekly basis averaging at 105.1mn share vs. 83.6mn shares in the week before. On the external front, IMF is presently demanding a clear-cut plan on the alleged financing gap of US$6.0bn despite the country getting US$3.0bn assurance from Saudi Arabia and UAE. Furthermore, current account balance moved to surplus after 27 months and posted at US$654mn for Mar'23. On the politics front, instability continued to persist over the week regarding upcoming elections. On the currency front, PkR showed minor strength against the greenback to close at PkR283.5/US$, gain of 0.33%WoW.

Other major news flows during the week included; 1) FDI falls 23pc to $1.048 billion in July-March, 2) SBP reserves fall by $170m, 3) Jul-Feb LSMI output declines 5.56pc YoY, 4) Govt borrows Rs599b via T-bills auction, 5) Textile exports plummet 22.6pc in March, 6) Textile exports plummet 22.6pc in March. Sector-wise, Tobacco, Close-end Mutual Fund, and Vanaspati and Allied Industries were amongst the top performers, up 14.3%/7.7%/4.7%WoW respectively.

On the other hand, Woollen, Paper and Board, and Insurance were amongst the worst performers with a decline of 4.0%/3.3%/2.2%WoW. Flow wise, major net selling was recorded by Mutual Funds with a net sell of US$3.3mn. On the other hand, Banks absorbed most of the selling with a net buy of US$5.5mn. Company-wise, top performers during the week were, i) FCEPL (up 19.1%WoW), ii) PAKT (up 15.7%WoW), iii) ENGRO (up 14.2%WoW), iv) DAWH (up 10.1%WoW), and v) BAHL (up 9.7%WoW), while top laggards were, i) AICL (down 15.5%WoW), ii) MUREB (down 14.4%WoW), iii) HINOON (down 12.0%WoW), iv) FATIMA (down 10.2%WoW), and v) PSEL (down 7.4%WoW).

Outlook

Going forward, market is expected to remain range bound amid delays on the SLA front with the IMF and overall political uncertainty. Any positive development on the IMF front and a move towards political stability will dictate the markets performance in the near term. Keeping that in mind, we advise clients to take a cautious approach, adopting a defensive investment strategy where we advocate companies with dollar-denominated revenue streams, i.e; Technology and E and P sector, to hedge against the currency risks.