EUR 13.65 For Business Accounts Only

Stock Smart Weekly (Feb 02, 2024)

Weekly Review                                

The index had a somewhat subdued week in terms of overall trading volumes (down 25%WoW), with momentum largely driven by news-based events, particularly in the energy sector. Further, decision surrounding the MPC meeting on Monday, coupled with expectations of CPI for Jan’24 kept participants in a state of suspense throughout the week. MPC’s decision came in as expected, with the central bank vowing to keeping rates unchanged, citing potential room for future easing, given that real interest rates are projected to remain positive over the next 12 months. CPI for Jan’24 clocked in at 28.34%YoY (vs. AKD expectations of 28.63%), largely on account of positive energy and food price adjustments during the month. On the external front, country’s FX reserves fell modestly by US$55mn, ending at US$8.22bn. Additionally, the domestic currency continued to strengthen against the greenback, ending the week at PkR279.41/USD (up 0.07%WoW). With regards to fuel price, Motor Gasoline and Diesel prices were raised by PkR13.55/2.75 per liter, attributed to higher shipping premiums, which arose from increased risks associated with conflict in the Middle East.                                                                             .
Overall, average trading volumes remained down by 24.7%WoW, clocking in at 312.8mn shares, compared to 415.8mn shares traded in the earlier week. The benchmark KSE-100 Index lost 810 points during the week, depicting a 1.27% decrease in the index. Other major news flows during the week were; 1) Pakistan asks China for $2b debt rollover, 2) ‘Six-month budget deficit soars to 2.3pc of GDP’, 3) IMF lowers Pakistan’s GDP growth projection to 2pc for current fiscal, 4) Challenges of inflation persist: MoF, and 5) Kibor gains pace, chasing 22pc. Sector-wise, Exchange traded funds and Transport were amongst the top performers, up 5.7% and 3.2%WoW respectively. On the other hand, Automobile parts & Accessories, Chemical and OMC were amongst the worst performers with a declines of 7.4%/6.9%/5.0% WoW. Flow wise, major net selling was recorded by Foreigner (net sell: US$9.7mn. On the other hand, Insurance companies absorbed most of the selling with a net buy of US$7.0mn. Company-wise, top performers during the week were, i) MTL (+5.7%WoW), ii) OGDC (+4.4%WoW), iii) UNITY (+3.6%WoW), iv) MCB (+3.5%WoW), and v) AKBL (+2.7%WoW), while top laggards were, i) YOUW (down -12.2%WoW), ii) PTC (down 12.1%WoW), iii) COLG (down 91%WoW), iv) KEL (down 9.1%WoW), and v) PGLC (down 8.3%WoW).

 

Outlook

Next week will be overshadowed by elections, and market participation is expected to remain subdued. Following the successful completion of the elections, the market is anticipated to gain momentum. Furthermore, circular debt settlement plan and industrial tariff rationalization plan, if they pass through the IMF node, is likely to boost investors’ confidence. Overall, we maintain a bullish outlook on the Banks, E&P, and OMC sectors, anticipating opportunities for potential earnings growth and attractive Dividend Yields.