EUR 13.93 For Business Accounts Only

Stock Smart Weekly (Mar 01,2024)

Weekly Review                                

Market's bullish trend continued this week, driven by ongoing political stability and the swearing-in of elected representatives at both the provincial and federal levels, along with strong financial result of Dec’24 quarter. Furthermore, PM election are scheduled for Sunday and the subsequent announcement of cabinet names added to the positive sentiment. Additionally, favorable macroeconomic indicators contributed to investor optimism. The benchmark index closed the week at 62,816pts on Friday, marking a gain of 1,763pts/2.8%WoW. In terms of macroeconomic details, the outlook on inflation embarked positivity, with the market expecting a drop to ~23-24% YoY in February, attributed to a high base effect from the previous year. While beyond expectations, actual inflation figures clocked in at 23.1%YoY vs. 28.3%/31.5% in Jan’24/SPLY. Additionally, Pakistan secured a US$2.0bn rollover from China, further bolstering economic stability. Moreover, a 10%MoM decline in imports led to a 13.5%MoM decrease in the trade deficit, bringing it down to US$1.7bn, pointing a controlled current account balance for Feb’24. However, FBR tax collections for the second consecutive month fell short of the set targets, raising concerns about meeting IMF conditions, while failure to address this shortfall with a concrete plan could prompt the IMF to impose further taxation measures during the second review.

Market participation increased 40.5%WoW, with the daily traded volume averaging 418.5mn sh compared to 298mn sh in the previous week. Other major news flows during the week included; 1) Jul-Jan borrowing stands at $6.3bn, 2) Equities, T-bills attract $98m in January, 3) Amended oil refinery policy notified and 4) Foreign investors triple repatriated earnings in seven months. Sector-wise, Leasing companies, Refinery, and Fertilizer were amongst the top performers, up 10.7%/8.1%/7.7%WoW respectively. On the other, Wollen, Leather & Tanneries, and Cable & electrical goods were amongst the worst performers with a decline of 4.0%/3.8%/3.4%WoW. Flow wise, major net selling was recorded by banks with a net sell of US$6.4mn. On the other hand, Foreigners absorbed most of the selling with a net buy of US$10.4mn. Company-wise, top performers during the week were, i) PGLC (up 15.8%WoW), ii) PIOC (up 15.1%WoW), iii) BAFL (up 13.2%WoW), iv) UNITY (up 12.6%WoW), and v) ATRL (up 11.8%WoW), while top laggards were, i) NCL (down 7.8%WoW), ii) ASL (down 6.3%WoW), iiI) TRG (down 5.7%WoW), iv) SRVI (down 5.1%WoW), v) BNWM (down 4.0%WoW).

  

Outlook

Future trajectory of the market is anticipated to hinge on forthcoming inflation data and SBP's policy decisions regarding it. Additionally, the completion of the second review under the current IMF SBA program remains crucial, as it would offer a financial cushion against the upcoming US$1.0bn Eurobond payment scheduled for April'15th. Overall, funding requirements for rest of the months in the current fiscal year seem to remain on track, we expect authorities to enter into a fresh EFF program by May’24 assuming political noise dies down and a decision on a Minister for Finance is made.