EUR 13.44 For Business Accounts Only

Stock Smart Weekly (May 13, 2022)

StockSmart                       

Weekly Review                                

The first full working week in May’22 stands no different than the latter half of Apr’22 for equities where KSE-100 index returned –ve 3.0%WoW to close at 43,486pts. The index continues to hold the all-important technical level of 42,700pts. Political uncertainty and indecisiveness over prerequisites for IMF program resumption have put Pakistan’s economic situation into a tailspin leading investors towards risk-averse behavior. PkR has depreciated 3.4%WoW against US$, standing at an all-time low of PkR192.9/US$ while FX reserves deplete to US$10.3bn, signifying an import cover of ~1.5months. Other important news flows during the week were, i) US Secretary of State Antony Blinken inviting Pakistan Foreign Minister to a meeting in Newyork – the first formal meeting with US Govt. officials with Pakistan counterparts since Sep’21, ii) 10MFY22 trade deficit widening by 65%YoY to stand at US$39.3bn with Apr’22 deficit standing at US$3.7bn, iii) Pakistan reporting first case of Omicron sub-variant, iv) Saudi Arabia tying US$3bn additional deposits with IMF program revival, v) RDA flows hitting US$4.2bn mark, vi) NSS revising profit rates by 0.96-3.0% across all schemes, vii) cement sales down 28%YoY in Apr’22, and viii) auto sales dropped 18%YoY in Apr’22. Sectorwise, amongst mainboards, Engineering, and Cement sector posted largest decline of 6.1%WoW and 5.9%WoW respectively owing to concerns over a potential slowdown in demand and margin shrinkage whereas overall, Cable & Electrical goods segment and Vanaspati & Allied industries recorded a decline of 7.7%WoW each. Sectors that exhibited outperformance during the week include Chemicals (outperformance: 2.0%), and E&Ps (outperformance: 1.6%). Flowwise, major net selling was recorded by Individuals (net sell: US$10.4mn), and mutual funds (net sell: US$3.2mn), as a result falling in the same boat as foreigners (net sell: US$1.9mn). On the other hand, Banks absorbed most of the selling with net buy of US$16.3mn. Stockwise, top performers include, i) HMM (+25.7%WoW), ii) SERT (+17.0%WoW), iii) SML (+9.6%WoW), iv) COLG (+8.1%WoW), and v) PSEL (+8.1%WoW), while top laggards were, i) MTL (down 14.4%WoW), ii) PAEL (down 11.1%WoW), iii) AVN (down 10.2%WoW), iv) CNERGY (down 10.1%WoW), and v) ANL (down 9.9%WoW).

 

Outlook

Market will remain choppy going forward as a host of economic challenges weigh in on the investor sentiments. Some respite may be provided if the fuel prices are unfrozen in the country which will help the government in its parleys with IMF. However, the downside of the same will be spiraling inflation which will likely cross the 15% in the coming months. We advise investors to remain cautious in the market.

AKD Research