EUR 13.65 For Business Accounts Only

Stock Smart Weekly (Jan 05,2023)

Weekly Review                                

2024 started optimistically for the KSE100, surging 2,211pts on the first day. However, political noise cast a shadow, dragging the index 151pts below the week's first day closing, to close at 64,515pts on Friday (↑3.3%WoW). Despite the headwinds, economic factors provided positive signals. SBP forex reserves rose by US$1.3bn in last two weeks of Dec’23, marking a 23-week high, closing at US$8.22bn as of Dec 29, 2023 and would potentially exceed further with the anticipated $700mn IMF second tranche in current month. Additionally, 18month-high exports (US$2.8bn) narrowed the trade deficit by 40% YoY, resulting in the current account to remain in control. However, December's CPI jump to 29.7%, spurred by fuel price adjustments, raises concerns about inflationary pressures. Overall, market participation also witnessed a slight recovery, with daily traded volumes averaging 687mn shares (up 5.4%WoW).

On the currency front, the Pakistani Rupee maintained its appreciation momentum by gaining 0.16%WoW against the US Dollar, closing at PkR281.4/US$ at week-end. Other major news flows during the week included 1) Nov FCA: Discos’ tariff hiked by Rs 4.13/unit, 2) Pakistan’s dollar bonds gain 93pc in 2023, 3) Cement exports jump 155pc, domestic sales fall 4pc in Dec, 4) Money supply reaches to Rs35.18tr in November, 5) SBA: IMF set for first review on 11th January. On the sectorial front, Automobile Parts & Accessories, Sugar and Allied Industries, and Oil and Gas Exploration companies were amongst the best performers with a growth of 13.69%/8.69%/7.93% WoW, respectively. Whereas, Modarabas, Cable and Electrical Goods, and Miscellaneous were the top laggards with a decline of 3.00%/2.55%/2.52%WoW, respectively. Flow wise, major net selling was recorded by Individuals with a net sell of US$10.63mn. And, other organizations absorbed most of the selling with a net buy of US$5.49mn. Company-wise, top performers during the week were, i) PSMC (up 20.5%WoW), ii) KEL (up 16.3%WoW), iii) HCAR (up 14.1%WoW), iv) SEARL (up 12.8%WoW), and v) OGDC (up 11.2%WoW), while top laggards were, i) PSEL (down 5.5%WoW), ii) ASL (down 2.9%WoW), iii) PAKT (down 2.7%WoW), iv) PSX (down 2.7%WoW), and v) LCI (down 1.9%WoW).

  

Outlook

Looking ahead, the market is anticipated to maintain its bullish momentum, fueled by the disbursement of the IMF SBA's second tranche. The forthcoming elections will be closely watched, and uncertainty surrounding their outcome could potentially hinder the market's bullish trend. However, a peaceful resolution could provide a significant boost to investor confidence. Our recommendation to investors is to maintain long-term positions in companies with strong fundamentals while tactfully managing any fundamentally weak entities through a timely profit-taking strategy. Additionally, companies offering robust dividend yields, especially in the Banking, Energy, and Fertilizer sectors, present opportunities for accumulation.