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Stock Smart Weekly (Dec 29,2023)

StockSmart                             

Weekly Review                                 

The KSE-100 index ended the week at 62,451.04pts (↑1.2%WoW), marking an end to the calendar year 2023. Overall, the benchmark index showed strong performance, particularly during the 2nd quarter of FY24, gaining ~54.5%/50.7% CYTD/FYTD. The gain in momentum is owed to expectations of release of US$700mn tranche by the IMF, bilateral and multilateral inflows, of which US$250mn is approved from the AIIB to aid sustainable growth. Furthermore, FX reserves increased by US$852mn WoW, which is attributable to inflows from the WB, ADB and bilateral support from Saudi Arabia and China. In addition, MTB auction showed a continued strong interest in 12 months’ paper (PkR1.49bn realized), with yields clocking in almost flat compared to last week, at ~21.4%. This depicted market’s ongoing view of an imminent monetary policy easing owing to lower CPI expectations, hence focus remained on locking in longer term papers. Average volumes and traded value for the week clocked-in at 651.76mn shares (↓46.4%WoW) and US$81.35mn (↓0.2%WoW), respectively.

On the currency front, PkR appreciated against the US$, ending at 281.86 (↑0.24%WoW). Other news for the week were; 1) Govt plans to borrow Rs3.88 trillion from banks in Jan-March; 2) First half of Jan’24: POL products’ prices may be sustained; 3) Foreign investors: Jul-Nov profit repatriation soars 312pc to $532m YoY; 4) Nov 23 FCA: CPPA tells Nepra why it seeks tariff hike; 5) Budgetary support during Jul 1-Dec 16, 2023 period: Govt borrowing jumps 200pc to Rs2.876trn YoY; 6) Islamabad, Riyadh agree on legal framework for Saudi investment; 8) Govt provides Rs200bn subsidy to power sector to curtail circular debt. Sector-wise flows suggest buying was witnessed in Leather & Tanneries/Automobiles Parts & Accessories/Sugar & Allied Industries (↑8.0%/7.6%/7.0% WoW), whereas major selling was seen in Woollen/Transport/Vanaspati & Allied Industries (↓5.0%/3.7%/3.4% WoW). Flow-wise, Insurance companies remained major buyers, netting US$4.26mn, while Individuals net sell amounted to US$6.51mn. Company-wise, top performers during the week were, i) KOHC (13.4%WoW), ii) KTML (10.0%WoW), iii) SRVI (9.7%WoW), iv) PGLC (9.4%WoW), and v) PAKT (8.8%WoW), while top laggards were, i) PSMC (8.2%WoW), ii) PTC (7.4%WoW), iii) PSEL (7.1%WoW), iv) CNERGY (6.3%WoW), and v) BNWM (5.0%WoW). Company wise total volume leaders were 1) KEL at 404.29mn shares; 2) WTL at 183.71mn shares; 3) FFL at 167.42mn shares; 4) CNERGY at 147.10mn shares; 5) BOP at 113.23mn shares.

 

Outlook

Going forward, we maintain an optimistic outlook on the market in the New Year and we believe the present rally to continue, albeit with episodes of profit taking. Our stance stems from an optimistic expectation of the IMF’s tranche receipt, triggering further bilateral/multilateral flows, increased FX reserves (though current import cover at ~1.8 months continues to present a macroeconomic risk), reducing uncertainty over general elections, which we can see by an increase in candidate nominations, amongst other factors. Overall, we advise our clients to remain focused on fundamentals, with exposure in high dividend yielding stocks to effectively navigate the inflationary environment.

 

 

AKD Research