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Stock Smart Weekly (Apr 19, 2024)

StockSmart                            

Weekly Review                                

The market’s trading session remained erratic throughout the week, however concluded on a stronger note on the last day, with the benchmark index challenging previous highs and achieving its highest-ever closing of 70,909pts on Friday, a weekly gain of 595pt/0.85%WoW. Average trading volumes stood at 492.37mn during the week, increasing by 43.51%WoW. Overall, the volatility may be attributed to the general uncertainty surrounding over international crude prices, primarily due to the ongoing rifts in the Middle East, with the tensions largely emanating due to the scuffle between Iran and Israel. However, a key highlight this week was the successful visit of the Saudi delegation to Pakistan, promising major investments in various sectors. Additionally, KSA’s acquisition of a 25% minority stake in the Reqo Diq Mining project for US$1.0bn appears to be progressing well, with the deal anticipated to finalize soon. With regards to FIPI flows, net foreign investments remained consistent throughout the outgoing week, culminating to US$33.86mn by Friday close. Finally, authorities repaid the maturing US$1.0bn Eurobond on April 12th, resulting in the SBP’s FX reserves to end the week at US$8.0bn. With regards to fuel price, Motor Gasoline and Diesel prices were raised by PkR4.53/8.14 per liter, attributed rising crude prices.

Other major news flows during the week included; 1) PIB sale falls short, yields dip on shorter maturities, 2) Pakistan is in a position to complete [gas] pipeline project with Iran, 3) Wheat production target of 32.2mn tons set for the current season is at high risk due to rainfall, 4) Government does not anticipate any significant currency devaluation. With regards to sector performances, Sugar & Allied industries, Refinery, Synthetic & Rayon, Vanaspati & Allied Industries, Textile Weaving were amongst the top performers, up 7.6%/5.22%/4.09%/3.81%/3.33%WoW respectively. On the other hand, Miscellaneous, Woolen, and Paper & Board were amongst the worst performers with a decline of -4.03%/-3.81%/-3.7%/WoW. Flow wise, major net selling was recorded by Individuals (US$14.43mn) & Banks (US$10.97mn). On the other hand, Brokers absorbed most of the local selling with a net buy of (US$1.23mn). Company-wise, top performers during the week were, 1) PSX (up 16.6%WoW), 2)FABL (up 13.6%WoW), 3)FATIMA (up 10.5%WoW), 4)AKBL (up 9.3%WoW), 5)NRL (up 8.8%WoW), while top laggards were, 1) PTC (down -12%WoW),  2)ISL (down -8.2%WoW),  3)KTML (down -5.5%WoW) 3)SEARL (down –5.1%WoW), 5)MUGHAL (down -4.8%WoW).

 

 Outlook

Going forward, market is expected to return its focus to negotiations with the IMF regarding The EFF program, upcoming MPC meeting, and the corporate results which are expected to be announced throughout the coming two weeks. Despite the market reaching its new highest, the forward P/E continues to remain below 5.0x, which instills positivity regarding the market's fundamentals. At these levels, we continue to advise investors to consider fundamentally strong stocks.

   

AKD Research