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AKD STOCK SMART

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 Weekly Review

Continuing to climb over last week's rise, aided by end-of-quarter spur in volumes (average daily turnover up 24.3%WoW), positive sectoral (cement pricing, auto investments, PkR depreciation-led export pickup) and stock related developments (approvals for KEL sponsor handover) the KSE-100 index rose by 1.2%WoW, closing at 45,560pts. Key news flow impacting markets encompass: 1) bi-monthly MPS announcement set for the end of the week (Friday, 30th) with market expectation of a 0.25bps rate hike contrary to AKD Research expectation of status quo, 2) pre-budget recommendations from the PSX Stockbrokers association proposing reduction in capital gains tax, levy on bonus shares and other measures to encourage public market investors, 3) rising public sector spending on law and order by the federal and provincial governments led to a decline in government spending on infrastructure, highways, roads and bridges, while the option of cutting PkR100bn in discretionary spending was also pushed, 4) news reports indicated that industrial activity may be hampered by a dispute over payment arrears between Sui Southern Gas Company Ltd (SSGCL) and K-Electric Ltd (KEL), and 5) as part of Nissan Motor Corp's re-entry in the domestic automotive assembling sector with Ghandhara Industries both companies laid out CAPEX plans for launching the Datsun variant in Pakistan by Dec'18. Stocks leading gains at the bourse included: 1) KEL (+11.1%WoW), 2) UBL (+7.5%WoW) and 3) FFC (+6.6%WoW), whereas laggards comprised of: 1) CHCC (-4.2%WoW), 2) ASTL (-2.1%WoW) and 3) NML (-1.9%WoW). Average daily turnover amounted to 239.7mn shares (+24.3%WoW) rising on the back of retail favourites (KEL/EPCL/JSBL with average daily traded volumes of 23.8/21.8/11.9mn shares). While foreign investor flows were in the green (inflow of US$1.9mn), individuals contributed the most to last weeks gains (inflow of US$8.5mn), whereas mutual funds continued to be sellers (US$10.5mn outflow over the week).

 

Outlook

Relative political stability, mid-trial judicial proceedings for the PML-N seemingly favouring the preceding PM's case and the armed forces affirming commitments to planned elections later in the year, the present phase of market consolidation has stamina. Additionally, enhancers in the form of incentives for industry or public market investors in the upcoming budget (expected to be announced by end-April) could prolong positive sentiments. â€‹

  AKD Research