EUR 13.93 For Business Accounts Only

Stock Smart Weekly (Feb 23,2024)

Weekly Review                                

With the political tumult settling, market bounced back and regained the points lost in the previous week. Benchmark index closed the week at 62,816pts on Friday, gaining 4.9%/2.9k pts WoW. To recall, the market had lost 3k pts last week amidst political uncertainty. Overall, week started with the positivity, however exacerbated after Bilawal Bhutto's announcement on Tuesday night of PM and President joint candidates. Similarly, provincial assemblies also began taking shape, with Punjab MPAs taking oaths and the announcement of the Sindh CM's name on Friday. Additionally, healthy corporate earnings and developments on the economic front supported the market's bullish momentum, with CAD for Jan’24 remaining depressed at US$269mn. Furthermore, FBR’s tax collection rose by 30%YoY from Jul’23 to mid-Feb’24, with total collection reaching PkR5.15tn during the period. Moreover, notification of deregulation of non-essential medications led to a rally in the pharmaceutical sector, posting the highest gains during the week. However, in the last T-bill auction on Wednesday, yields for 3-month papers rose by 126bps as participants foresee a status quo in the next MPC scheduled in Mar’24.

Market participation remained subdued, with the daily traded volume averaging 298mn sh compared to 350mn sh in the previous week, down 15%WoW. Other major news flows during the week included; 1) Jul-Jan power sector circular debt soars to Rs2.635trn, 2) Tax proposals for budget sought, 3) IT exports soar by 39pc in Jan amid currency calm and regulatory support and 4) Jul-Jan FDI inflow down 21pc to $689.5m YoY. Sector-wise, Pharmaceutical, Woollen, and Technology were amongst the top performers, up 9.7%/8.7%/7.9%WoW respectively. On the other, Property, Synthetic & Rayon, and vanaspati were amongst the worst performers with a decline of 2.6%/2.3%/1.9%WoW. Flow wise, major net selling was recorded by individuals with a net sell of US$6.2mn. On the other hand, Mutual Funds absorbed most of the selling with a net buy of US$3.3mn. Company-wise, top performers during the week were, i) YOUW (up 32.1%WoW), ii) SEARL (up 17.9%WoW), iii) OGDC (up 16.0%WoW), iv) PSO (up 15.8%WoW), and v) ABOT (up 15.3%WoW), while top laggards were, i) PSEL (down 10.3%WoW), ii) GADT (down 6.5%WoW), iiI) JVDC (down 5.5%WoW), iv) NESTLE (down 3.5%WoW), v) FATIMA (down 3.1%WoW).

 

Outlook

Going forward, market will remain heavily influenced by political developments in the short term, with progress towards proper government formation likely to push the index movement upward. However, in the medium term, market performance will likely hinge on signals from the new govt's dealings with IMF for second SBA review and the next EFF program. Given the market's sensitivity to politics, we advise market participants to remain cautious and maintain their investments in financially strong companies, with exposure skewed towards high dividend-yielding stocks.