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Stock Smart Weekly

StockSmart                       

Weekly Review                                

The momentum gathered in the last trading session of last week, fueled further on the first trading session of outgoing week where investors across the board welcomed newly formed Govt. set up of coalition parties (PML-N, PPP, JUI-F and MQM-P) led by Shehbaz Sharif (the new PM). Filled with exuberance, the benchmark KSE-100 index registered 1,700pts rally on Monday – the largest single day return of 3.83%DoD – to close the index at 46,145pts. Besides Monday, the rally continued throughout the week, keeping KSE-100 index to over 46,000 barrier and closing the week at 46,602pts, up 4.85%WoW. To top it off, PkR appreciated 1.7%WoW against the US$. Moreover, participation remain strong throughout the week averaging around 477mn shares, up 212.6%WoW. Major news flows during the week were, i) The National Assembly expressed a lack of confidence in prime minister Imran Khan, thereby de-seating him and elected Shehbaz Sharif as PM, ii) The IMF welcomed SBP’s decision of raising the policy rate by 250bps to 12.25%, iii) Govt owes OMCs PkR55bn in Apr’22 fuel subsidy, iv) The new PM sends positive signals to China, US, Russia and India, v) Car sales increased by 25/30% QoQ/YoY in Mar’22, vi) Remittances in Mar’22 clocked in at US$2.8bn, and vii) Barrick bets big on Pakistan with US$7bn copper mine project. Sector wise, amongst major sectors Refineries topped with a gain of 26.6%WoW, followed by Engineering (+9.4%WoW) and Tech (+8.2%WoW) whereas across all sectors Woollen and Leasing gained 13.3%WoW and 11.2%WoW respectively – the most after Refinery sector. Flow wise, Individuals remained the major buyers with (net buy of US$18.9mn) followed by Companies (net buy of US$2.12mn) while Mutual Funds stood on the other side with (net sell of US$9.9mn) followed by Insurance companies (net sell of US$7.8mn). Top performing stocks for the week were, i) CNERGY (+29.2%WoW), ii) NRL (+27.1%WoW), iii) ATRL (+23.2%WoW), iv) AVN (+19.0%WoW), and v) PIBTL (+18.8%WoW), while laggards were, i) COLG (down 3.4%WoW), ii) HGFA (down 2.3%WoW), iii) GLAXO (down 1.8%WoW), iv) MUREB (down 1.7%WoW), and v) FML (down 1.5%WoW).

Outlook

The positive momentum in the market shall continue in the near term (market is currently trading at a P/E of 4.5x), however, political arena is also heating up with PTI staging peaceful protest across the country. Even though this largely remains non-event from stock market’s vantage, however, any escalation in tensions can have negative impact on investor’s sentiment. Moreover, result season is likely to pick up pace in the upcoming week where surprises cannot be ruled out for driving individual stock performance. Major results next week are: EPCL, POL, MLCF, EFERT, FFBL, ABL, HBL, UBL, ATRL, ASTL, ISL and ENGRO. We continue to advise investors for building long-term positions, limiting short-term trading. Techs (SYS, AVN), Banks (MEBL, MCB, UBL, HBL), and Textiles (NCL, ILP and GATM).

AKD Research