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AKD STOCK SMART

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Weekly Review

Sentiments dampened during the outgoing week, with benchmark KSE-100 closing at 45,259.34 points (-1.76%WoW) as investors factored in heightening political noise along with seesawing budgetary expectations as the incumbent govt’s tenure ends in May’18. Average daily traded volumes shrunk by 37.30%WoW to 155.15mn shares with 1) EPCL (51.64mn shares), 2) LOTCHEM (46.39mn shares), 3) UNITY (45.08mn shares), 4) KEL (43.09mn shares) and 5) FCCL (37.66mn shares) leading the board. Key news flows impacting the market during the week included: 1) current account deficit widening to US$12.03bn (up 51%YoY) for 9MFY18 reflecting mounting pressure of trade deficit, 2) expected announcement of an agriculture package in the upcoming budget with relief in taxes (on imported machinery) and a hefty subsidy to support the farmers including removal of sales taxes on tractor (from 5% currently), while the Punjab gov’t increased subsidy on DAP from PkR150/bag to PkR300/bag , 3) Ghandhara Nissan signing an agreement with Renault for import of heavy commercial vehicles primarily for test & trial purposes, 4) federal government borrowing PkR34bn through auction of PIBs where many institutions were previously reluctant to lock in rates at the prevailing historic low levels, and 5) foreign exchange reserves falling to US$17.55bn (-0.53%WoW), where SBP reserves decreased by US$58.7mn ending at US$11.38bn. Performance leaders during the week were: 1) BAFL (+4.2%WoW), 2) APL (+3.17%WoW), 3) EFERT (+2.17%WoW), 4) INDU (+1.7%WoW) and 5) KAPCO (+1.1%WoW); while laggards included: 1) FFBL (-10.56%WoW), 2), DGKC (-8.38%WoW), 3) OGDC (-6.57%WoW), 4) HBL (-5.61%WoW) and 5) FCCL (-5.4%WoW). Foreigners continued to off-load their holding with majority of the selling coming from OGDC’s share placement deal (~54mn shares) at PkR164/sh. Cumulative outflow was recorded at US$41.79mn during the week vs. inflow of US$17.45mn last week.

 

Outlook

Anticipation of budgetary measures will likely drive the market in the upcoming week, where GoP is scheduled to present the federal budget on Apr 27’18. Additionally, E&Ps could garner `investors’ attention as intl. oil prices hit their 4yr high-watermark. Moreover, investors will keep a close eye on result announcement by large cap. companies including PSO, ENGRO, PPL, OGDC, KAPCO, HUBC, MCB, FFC, FATIMA, INDU & PSMC in the next week.

 

AKD Research