EUR 13.65 For Business Accounts Only

Stock Smart Weekly (Dec 01,2023)

Weekly Review
The benchmark index continued with its upward rally during the week, with the KSE-100 maintaining its unrelenting bullish momentum, finally settling at 61,691pts (↑4.4%WoW), reflecting its highest ever level. Although the market participation witnessed a dip of 6.7%WoW, investors remained engaged amid the historic ascent, with avg. traded volume of 612.5mn shares. The impetus, post IMF review success, sustained with a notable increase in foreign inflows into the market, with net FIPI buying hitting its 6-year high of US$35mn in Nov’23. Furthermore, Kuwait & UAE agreements, US$3bn deposit extension by KSA and an expected US$2bn inflow from the World Bank in FY24 (albeit with policy-level concerns), above target FBR collections at PkR3.48bn for 5MFY24, bolstered market sentiments. Furthermore, trade deficit for Nov’23 witnessed a 13%MoM decline, settling at US$1.9bn compared to US$2.2bn in the preceding month. Meanwhile, the week concluded with an elevated CPI reading of 29.2%YoY, exacerbated by the recent gas price hike.
On the currency front, PkR appreciated against the US$, ending at 284.97 (↑0.1%). Additionally, SBP reserves ended US$77mn higher at US$7.3bn, taking total reserves to US$12.4bn, amidst high profit repatriation and easing of imports’ control. Other news for the week were; 1) IHC suspends SRO about tax on banks’ windfall income; 2) FCA for Oct: Nepra may allow additional Rs3.53/unit in Dec bills; 3) T-bills yields fall but rate cut bets cool on inflation; 4) Oil prices gain near 2% on expectations of deeper OPEC+ cuts; 5) IMF team briefed about tax policy reforms; 6) Outflows jump almost 21 times in October; 7) NAC lowers FY23 growth rate to -0.17pc; 8) TCP tenders to buy 110,000 metric tons of wheat. Sector-wise flows suggest buying was witnessed across the board as every sector, except REITs (unchanged) closed in the green. Emerging as the top performers during the week were Close-end mutual funds, Woollen, Tobacco and Automobile assemblers, up WoW by 66.5%, 54.8%, 43.4% and 39.9%. Flow-wise, Banks/DFI remained major buyers, netting US$14.96mn, while major selling by Other Organization amounted to US$1.49mn. Company-wise, top performers during the week were, i) DGKC (23.1%WoW), ii) ATLH (22.3%WoW), iii) MTL (20.1%WoW), iv) PSEL (18.5%WoW), and v) FCEPL (14.7%WoW), while top laggards were, i) PGLC (9.4%WoW), ii) ANL (7.7%WoW), iii) GHGL (6.8%WoW), iv) MARI (6.7%WoW), and v) BNWM (6.7%WoW). Company wise total volume leaders were 1) KOSM at 226.72mn shares; 2) WTL at 176.87mn shares; 3) BOP at 133.24mn shares; 4) MLCF at 98.88mn shares; 5) CNERGY at 92.14mn shares.

Outlook
Going forward, we maintain an optimistic outlook on the market and we believe the present rally to continue, albeit with episodes of profit taking. Our stance stems from a positive conclusion to the IMF’s review amidst improving macro indicators and fading uncertainty over the upcoming elections, even though the country faces tough economic decisions in the near future, as outlined by the World Bank, in our opinion. Overall, we advise our clients to focus on fundamentals, with exposure in high dividend yielding stocks to effectively navigate the inflationary environment.