EUR 13.22 For Business Accounts Only

Stock Smart Weekly (Nov 13, 2020)

Weekly Review                                

KSE100’s sentiment remained mixed during the outgoing week on the back of positive developments globally being offset increasing COVID-19 cases locally. Starting the week with clarity over US elections, index showed strength in the initial hours of first trading session however gains were later pared on the back of alarming increase in COVID-19 positivity ratio (standing around 5% currently). Pfizer’s announcement of its vaccine being 90% effective instilled euphoria in international markets and KSE-100 followed with an increase of 369 points during second trading session of the week however once again alarming increase in COVID-19 cases turned out to be a dampener with KSE-100 decreasing by 633pts during fourth session. Consequently, KSE-100 closed the week at 40,569, down 0.4%WoW. During the week, Oil & Gas Exploration remained among the top performers (up 2.2%WoW) as oil prices rebounded on the back of Pfizer’s vaccine announcement and significant drawdown of inventories. Cement sector remained among the laggards (down 3.9%WoW) as market reacted to increasing coal prices and decrease in dispatches during the ongoing month.  Major newsflow during the week included, i) Saudi Arabia indicating that it might refuse a rollover of USD2bn to Pakistan, ii) Pakistan planning to float much delayed Eurobonds worth USD1-1.5bn within two months to shore up foreign exchange reserves, iii) Auto sales showing a brisk upward trend in 4MFY21 with 8.1%YoY rise in car sales, iv) IMF all set to convert all missed structural benchmarks as “prior actions” for the formal revival of second review under the USD6bn program, and v) Inflows of workers’ remittances remaining over USD2bn for the fifth consecutive month in Oct’20. Avg. volumes declined to 289.7mn shares vs. 368.2mn shares in the previous week. Top performers during the week were, i) SYS (+15.2%WoW), ii) SFL (+13.4%WoW), iii) COLG (+6.8%WoW), iv) GHGL (+4.8%WoW), and v) GLAXO (+4.6%WoW) whereas laggards were, i) FFBL (-16.7%WoW), ii) SNGP (-15.3%WoW), iii) HCAR (-8.1%WoW), iv) SSGC (-8.0%WoW), and v) PSMC (-7.3%WoW).

 

Outlook

 

Volatile sessions are likely to continue in the coming week amid increasing COVID-19 across the country and foreign investors shifting portfolio towards safer bets. However, any weakness should open valuations which had become stretched in our view. Hence, we advise buy on dips strategy in the short term with our preference tilted towards Banks (particularly top tier as expectation of resumption in payouts could drive stock performance in the near term), Construction-related sectors, Power and Textiles.

AKD Research