EUR 13.68 For Business Accounts Only

Stock Smart Weekly (Jun 02, 2023)

Weekly Review                                

In a week that saw positive movement in the first two days, the market witnessed bearish momentum come Wednesday, while recovering at the week-end to close the week on an overall positive note. The KSE-100 index gained 388 points during the week period to close at 41,353points, a gain of 0.95%WoW. Participation in the market remained strong, increasing by 53.1%WoW averaging 180.3mn shares compared to avg of 117.7mn shares last week. Furthermore, CPI inflation for Apr’23 clocked in at a record high of 38.0%YoY, majorly heightened by the food group that witnessed a 48.1%YoY increase. On the IMF front, uncertainty continues to linger as talks of Pakistan and the IMF going their separate ways continued to linger. However, rumors were clarified by MoS Aisha Ghaus Pasha, expressing that the incumbent government is committed to the IMF program. Meanwhile, SBP held reserves fell by US$102mn due to external debt payments, to stand at US$9.09bn as of May 26, 2023. On the currency front, PkR depreciated by 0.18%WoW to close the week at PkR285.68/US$. Other major news flows during the week included; 1) Oil sales plunged by 40pc in May amid economic slowdown, 2) Cement sales rise 9pc in May, signaling an uptick in construction, 3) Rs62bn short of Rs621bn monthly target, 4) Govt raises Rs2.286tr through treasury bills auction, 5) Price of petrol cut by Rs8, diesel’s by Rs5, 6) Flood victims; WB approves $213m financing. Sector-wise, Synthetic & Rayon, Close-end Mutual Fund, and Sugar & Allied Industries were amongst the top performers, up 10.1%/9.3%/6.6%WoW respectively. On the other hand, Textile Weaving, Property, and Food & Personal care products were amongst the worst performers with a decline of 4.8%/4.4%/1.3%WoW. Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$3.19mn. On the other hand, Brokers absorbed most of the selling with a net buy of US$1.93mn. Company-wise, top performers during the week were, i) CEPB (up 17.9%WoW), ii) INIL (up 13.7%WoW), iii) HGFA (up 13.6%WoW), iv) DGKC (up 12.8%WoW), and v) PIBTL (up 9.3%WoW), while top laggards were, i) GATM (down 9.9%WoW), ii) JVDC (down 6.8%WoW), iii) UPFL (down 5.8%WoW), iv) HMB (down 5.1%WoW), and v) FHAM (down 4.9%WoW).

  

Outlook

Market is expected to remain range bound in the near future and the upcoming federal budget on June 9, would dictate the market direction. As evident with the recent happening on the suggested tax on retained earnings profit, followed by announcements of EOGMs by companies to increase authorized share capital. Overall, we advise investors to take a cautious approach while building positions in the market and we continue to advocate the stocks with dollar-denominated revenue streams (Technology and E&P sector), to hedge against the currency risks or companies with healthy forward dividend yields.