EUR 13.68 For Business Accounts Only

Stock Smart Weekly (Jul 21, 2023)

Weekly Review                                

The week started with the range-bound activity on the first three trading days over the rumors of a potential interest rate hike in the next MPC. However, the last two days saw bullish sessions, resulting in the KSE100 gaining 853pts over the week and closing at 45,921pts on Friday, marking a gain of 1.9%WoW. Meanwhile, participation witnessed a decline of 8%WoW averaging 323mn shares traded compared to the previous week's avg. of 352mn shares. During the week IMF shared the country's report post-Standby Arrangement (SBA), setting 10 structural benchmarks for the SBA. One of the benchmarks involves a set band limit of ±1.25% premium/discount between the open market and Interbank rate during any consecutive five trading days. Amidst these developments, the Current Account posted a surplus of US$334mn for the month of June, leading to a full-year Current Account Deficit (CAD) of US$2.56bn, down 85%YoY due to curtailed imports. Additionally, State Bank Fx reserves received a boost of US$4.2bn from KSA, UAE & IMF, bringing the total SBP held reserves to US$8.7bn as of July 14, 2023. On the currency front, PkR loses 3.2%WoW to close at PkR286.8/US$. Other major news flows during the week included; 1) 8pc of GDP: IMF projects $28.361bn gross external financing needs, 2) FDI falls 25pc in FY23, 3) Section 4C of Income Tax Ord will only have prospective effect: IHC, 4) Textile exports decline 14.6 percent in FY23, 5) Petrol price slashed by Rs9, HSD’s by Rs7, 6) NA, Sindh PA likely to be dissolved by Aug 8, 2023. Sector-wise, Close-End Mutual Fund, Jute, and Commercial Banks were amongst the top performers, up 14.0%/12.9%/7.2%WoW respectively. On the other hand, Woollen, Tobacco, and Pharmaceuticals were amongst the worst performers with a decline of 5.4%/4.5%/2.6%WoW. Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$5.8mn. On the other hand, Foreigners absorbed most of the selling with a net buy of US$5.4mn. Company-wise, top performers during the week were, i) BOP (up 18%WoW), ii) UBL (up 17%WoW), iii) SHEL (up 14%WoW), iv) HGFA (up 12%WoW), and v) UNITY (up 11%WoW), while top laggards were, i) AIRLINK (down 9%WoW), ii) AGP (down 6%WoW), iii) RMPL (down 6%WoW), iv) PTC (down 6%WoW), and v) BNWM (down 5%WoW).

 

Outlook

The market is expected to maintain a positive outlook due to strengthening Fx reserves and positive economic developments. However, upcoming results may exert pressure on bullish sentiment due to the retrospective imposition of the super tax. In addition, political situation would also be in the limelight, especially after previous statements from ministers of the incumbent government. Therefore, we advise investors to take a prudent approach to stock selection and recommend focusing on stocks with strong financials, dollar-denominated revenue streams (Tech and E&Ps), or companies with healthy dividend-yields.