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Stock Smart Weekly (Apr 30, 2021)

StockSmart                       

Weekly Review                                

After starting the week on a jubilant note on the back of strong economic data, market remained constantly under pressure, losing 1,420pts during last four sessions as political uncertainty mounted with a spat among ruling party’s members while increasing severity of COVID-19 further increased the jitteriness as various news reports suggested a possible lockdown to be imposed in highly affected areas. Resultantly, KSE-100 closed the week at 44,262pts, down 0.99%. Across the board profit taking was witnessed where engineering sector, despite posting impressive results, remained among the laggards, going down by 6.7% during the week. Participation continues to remain low as well as investors await clarity with average daily turnover decreasing by 0.5%WoW to 332mn shares. Key news flow during the week included: i) Inflows of foreign exchange through the Roshan Digital Account (RDA) crossing the USD1bn mark, ii) Country posting a current account deficit of USD47mn in Mar’21 but the first nine months of FY21 remaining in surplus territory, iii) Urea off-take during 1QCY21 swelling by 37%YoY to 1.34mn tons, iv) Pakistan recording 201 coronavirus deaths, which is the highest single day coronavirus toll, and v) Total liquid foreign exchange reserves increasing by USD307mn  to USD23.5bn at the end of last week. Flow wise, foreigners remained net sellers with a net sell of USD13.14mn followed by individuals (net sell of USD6.28). The selling was absorbed by other organizations (net buy of USD16.1mn) and mutual funds (net buy of USD13.35mn). Stock wise, top performers include, i) GATI (+12.7%WoW), ii) FML (+10.8%WoW), iii) SCBPL (+10.7%WoW), iv) COLG (+8.1%WoW), and v) ILP (+6.4%WoW) whereas laggards were, i) PSMC (down 12.5%WoW), ii) PAKT (down 12.2%WoW), iii) NBP (down 9.1%WoW), iv) INIL (down 8.5%WoW), and v) LOTCHEM (down  8.4%WoW).        

 

Outlook

Political uncertainty and COVID-19 are expected to dictate the market sentiment post conclusion of result season. Any further increase in positivity rate will further increase the probability of lockdown which can keep the market under pressure. However, stock specific activity cannot be ruled out particularly in the stocks which are expected to be added to MSCI Emerging Markets Index.

AKD Research