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Stock Smart Weekly (July 14, 2023)

StockSmart                            

Weekly Review                                

The market hit off with a bullish note, gaining momentum in the first three trading sessions. However, profit-taking by investors resulted in market closing red during the last two sessions. The benchmark index gained 861pts during the outgoing week to close at 45,068pts, a gain of 1.9%WoW. Market participation also remained healthy during the week with traded volume averaging at 352mn compared to avg. of 265mn shares in the previous week (↑33%WoW). The market’s upbeat performance has been characterized by the IMF’s executive board’s approval of the SBA (Stand-By Arrangement) and the influx of US$2.0/1.0/1.2bn from KSA, UAE, and IMF, respectively. However, the said inflows would reflect in the next week's SBP-reserve numbers which are anticipated to cross the US$8bn mark after 9 months. Meanwhile, as of July 7, SBP held reserves stood at US$4.5bn. On the currency front, PkR gains 0.11%WoW to close at PkR277.6/US$. Other major news flows during the week included; 1) Steps to broaden tax base: FY24 budget advances primary surplus of 0.4pc of GDP: IMF, 2) July-May LSMI output declines 9.87pc YoY, 3) FY23 remittances fall 13.6pc to $27bn YoY, 4) Car sales plunge 82pc in June; 59pc in FY23, 5) Base tariff hike in FY24: Govt to collect over Rs3.2tr extra from power consumers, 6) Jan-May: 4.88m mobile phones manufactured in country. Sector-wise, Chemical, Automobile Parts & Accessories, and Leather & Tanneries were amongst the top performers, up 12.9%/9.3%/7.5%WoW respectively. On the other hand, Close-End Mutual Fund, Technology & Communication, and Textile Spinning were amongst the worst performers with a decline of 2.7%/2.2%/1.9%WoW. Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$5.97mn. On the other hand, Individual absorbed most of the selling with a net buy of US$3.93mn. Company-wise, top performers during the week were, i) UNITY (up 26.5%WoW), ii) HCAR (up 23.9%WoW), iii) COLG (up 20.6%WoW), iv) PSMC (up 17.1%WoW), and v) AIRLINK (up 14.3%WoW), while top laggards were, i) GADT (down 9.8%WoW), ii) UPFL (down 6.2%WoW), iii) SHEL (down 6.0%WoW), iv) PGLC (down 4.1%WoW), and v) TRG (down 3.9%WoW).

 

 Outlook

Market is expected to remain positive, owing to the firming Fx reserves and consequent improvements in the PkR/US$ parity, and market being at an attractive valuation with a sub 3x P/E. However, upcoming results may exert pressure on bullish sentiment due to the retrospective imposition of the super tax. Therefore, we advise investors to take a cautious approach to stock selection and recommend focusing on stocks with dollar-denominated revenue streams (Tech and E&Ps) or companies with healthy dividend-yields.

 

AKD Research