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AKD STOCK SMART, Aug 07, 2020

StockSmart                       

Weekly Review                                

Bulls continue to dominate the market with the market breaking 40K barrier (after a gap of 6M), daily volume reaching ~4Y high to 950.7mn shares and traded value reaching 38M high of PkR34.5bn in the outgoing week. KSE-100 closed at 40,030pts, +1.96%WoW and marking the 7th continuous week of positive close. Avg. volumes stood at 638.2mn shares vs. 389.8mn shares in the previous week led by, i) WTL (410mn shares), ii) POWER (181mn shares), iii) TRG (177mn shares), iv) MLCF (156mn shares), and v) PAEL (140mn sharea). Major news flows were, i) Cement dispatches recording a jump of 38%YoY to 4.3mn tonnes in Jul’20, ii) Exports rebounding after 4Ms of decline, growing by 5.8%YoY to ~US$2.0bn whereas imports continue to decline (down 4.2%YoY to US$3.5bn), iii) CPI for Jul’20 standing at 9.26%YoY as economic activity gradually resumed with the easing of coronavirus lockdowns, driving food and fuel prices higher, iv) FBR collection for Jul’20 recorded at PkR300bn – exceeding target by 23.4% and was up 15%YoY, and v) Govt. further easing restrictions from coming week. Sector wise, major sectors were led by Engineering (+13.5%WoW on optimism surrounding construction activities), Cements (+6.3%WoW), and Autos (+5.0%WoW) while Refinery sector (+12.2%WoW on draft policy favoring midstream and downstream oil) was the leader in side boards. Flow wise, foreigners turned buyers (net buy: US$3.7mn) whereas within locals, Individuals with a net buy of US$41.1mn absorbed profit-taking by Insurance (Net sell: US$29.4mn) and Mutual Funds (Net sell: US$11.9mn). Top performers during the week were, i) JLICL (+36.0%WoW), ii) PSX (23.1%WoW), iii) HCAR (22.2%WoW), iv) PIOC (20.9%WoW), and v) PSMC (20.7%WoW) while laggards were, i) BNWM (-5.5%WoW), ii) SYS (-5.2%WoW), iii) SHFA (-4.7%WoW), iv) IDYM (-4.2%WoW), and v) FATIMA (-4.1%WoW).

 

Outlook

 

Market should sustain its momentum in the coming weeks amidst lack of triggers and negatives in result season being largely priced-in. Cement/Steel should continue being the driving force in the backdrop of improved outlook for construction activity while techs could keep investors sentiments upbeat. We also like banks (on cheap valuations), consumers (Govt. opening economy further should stimulate consumer demand) and OMCs (being an indirect beneficiary of increased economic activity).

AKD Research