Karachi, December 17, 2021 (PPI-OT): KSE100 stages a comeback on much-needed clarity; +1.2% WoW

The week started with dismal performance as market awaited clarity regarding the monetary policy action. The central bank on Tuesday increased policy rate by 100bps to 9.75%, as opposed to 175bps room implied by secondary market yields, also indicating that policy settings will remain broadly unchanged in the near-term. Market reacted positively to the news and cyclical sectors got into limelight, especially after SBP’s indication of no policy move in Jan-2022. Nonetheless, concerns over macroeconomic indicators, continuous PKR depreciation, and immune behaviour of cutoffs in T-bill auction mid-week tempted investors to book gains the next day.

Market regained some confidence on the last trading day when yields in the secondary market dropped in reaction to SBP’s announcement of liquidity injection through OMOs for 63 and 7days. Cements (5.8% WoW) and Engineering (9.0% WoW) were among the key performers this week. On the news front, government reduced rates for petrol and diesel by Rs5/litre adjusting for the decline in global oil prices. Moreover, CCoE approved a gas load management plan under which gas to CNG sectors will remain suspended until mid of Feb-2022 while non-export sectors will be provided gas every alternate week.