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Stock Smart Weekly (May 20, 2022)

StockSmart                       

Weekly Review                                

Week started on a bad note with the market declining by 1.9% on the first trading day as lack of economic direction weighed heavily. Even though market recovered in later trading sessions, but overall market remained choppy, lacking clear direction throughout the week. KSE-100 closed the week at 43,101pts, down 0.89%WoW while average volume for the week stood at 220.8mn against 274.04mn for last week. Overall, political uncertainty and indecisiveness over prerequi-sites for IMF program resumption have put Pakistan’s economic situation into a tailspin leading investors towards risk-averse behavior. Other important news flows during the week were, i) Remittances grew strongly by 11.2% to USD3.12bn in Apr’22 as compared to USD2.81bn for Mar’22, ii) Large-scale manufacturing (LSM) industries recording 10.4%YoY growth during July- March of the ongoing fiscal year, iii) Pakistan and the United States resuming their efforts to re-build bilateral ties with a series of meetings between their foreign policy chiefs in New York, iv) Pakistan and the International Monetary Fund (IMF) commenced review talks in Doha from Wednesday for a week in a renewed effort to strike a staff-level agreement, and v) Government imposing a ban on the import of 38 non-essential luxury items. Sector wise, amongst mainboards, fertilizer sector was among the sectors posting a positive performance as investors moved to high dividend yield stocks. Another sector which posted a positive performance was engineering with an increase of 2.4%WoW. On the other hand, cement sector was amongst the worst performers with a decline of 3.1% for the week as coal prices continue their upward march. Flow wise, major net selling was recorded by Mutual Funds (net sell: US$7.28mn), and similarly foreigners also remained net sellers during the week (net sell: US$6.08mn). On the other hand, Banks absorbed most of the selling with net buy of US$11.5mn. Stock wise, top performers include, i) POML (+15.1%WoW), ii) EPCL (+10.5%WoW), iii) HGFA (+8.9%WoW), iv) ASL (+8.6%WoW), and v) PSMC (+6.8%WoW), while top laggards were, i) SML (down 7.5%WoW), ii) TGL (down 6.6%WoW), iii) CHCC (down 5.7%WoW), iv) ILP (down 5.3%WoW), and v) GATM (down 4.9%WoW).

 

Outlook

Market will remain choppy going forward as a host of economic challenges weigh in on the inves-tor sentiments. Some respite may be provided if the fuel prices are unfrozen in the country which will help the government in its parleys with IMF. However, the downside of the same will be spi-raling inflation which will likely cross the 15% in the coming months. We advise investors to re-main cautious in the market.

AKD Research