Karachi, July 30, 2021 (PPI-OT): Weekly Review

Following the Eid holidays, the market started the week with crumbly emotion as the anxiety grew over the drastic surge in Covid’s delta variant which continued to derail the investor confidence. Correspondingly, the investors preferred to remain as spectators in light of uncertainty over the announcement of monitory policy where they feared a hike of 25-50bps due to the PkR devaluation of 2.7%MoM. Although the policy rate remained unchanged, the market still lacked the bullish sentiment. The first half of trading session on Friday saw bulls come into force, however, panic selling took over the trading floor following the announcement of strict lockdown to curb the spread of delta variant which had taken over the financial capital by storm. The index shred 738pts, down 1.54%WoW to close at 47,055pts while the average trading volume remained substantially low at 318mn, down 32%WoW.

Other news flow during the week included: i) Forex reserves crossing the mark of US$25bn with Eurobond inflows, ii) Shaukat Tarin’s statement to retain IMF program, iii) IT exports growing 47.4%YoY to cross the US$2bn mark in FY21, iv) IMF’s revision of Pakistan’s GDP rate to 3.9% in outgoing FY21, v) PSDP spending exceeding the FY21 target vi) Fertilizer offtake declining by 41.4%YoY in June’21, and vii) foreign investors’ confidence rising in Pakistan. Top performers of the market included i) KTML (+12.5%WoW), ii) JDWS (+11.6%WoW), iii) SFL (+5.6%WoW), iv) EFERT (+5.1%WoW), and v) ICI (+4.8%WoW). The laggards included: i) STJT (-14.8%WoW), ii) HASCOL (-14.6%WoW), iii) ANL (-11.3%WoW), iv) AGP (-10.0%WoW), and v) UNITY (-9.9%WoW). Top volume leaders included WTL (294.23mn), BYCO (160.39mn), TELE (103.89mn), TPL (71.58mn) and HUMNL (50.58mn). Flow wise, Banks/DFIs remained the major buyers with (net buy of US$6.3mn) followed by Other Organizations (net buy of US$2.43mn), Broker Proprietary (net buy of US$1.29mn) and Mutual Funds (net buy of US$1.11mn) while Individuals stood on the other side with (net sell of US$4.84mn) followed by Companies (net sell of US$1.58mn).

Outlook

With strict lockdown in place for a period of one week and disruptions in industrial operations, we can expect a shaky investor confidence as they may prefer to hold liquidity in their hands. However, with an increase in the rate of Covid vaccinations, we expect healthy rebound in upcoming weeks. In addition to this, the announcement of Auto Policy’21 will keep the investor confidence upbeat in the sector where as strong corporate results can potentially drive the market north. Finally, the market forces are expected to become positive once the IMF review starts to unfold in September.