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Stock Smart Weekly (Sep 08,2023)

Weekly Review

Market remained range-bound over the week, with KSE100 marginally fluctuating in the slim range of 654points. Where the fear of interest rate hike due to the increase in the T-bills auction yields by 162-213bps held on Sept 7th vs. last auction (3M yields: 24.5%), kept the market’s weekly activity in check. However, positive developments over SIFC and the caretaker prime minister’s announcement of total expected inflows of US$50bn from UAE and Saudi expected to materialize in the next 4-5 years have added a substantial layer of positivity to this multifaceted narrative. Overall KSE100 index closed at 46,013 points with a gain of 1.55%WoW. Meanwhile, market participation declined by 26%WoW, averaging at 138mn shares. On the currency front, rupee strengthened against the greenback, gaining 0.83% over the week to close at PkR302.95/US$. Moreover, administrative measures bore results, taking the gap between interbank and open market below 1% which stood at ~4-5% last week. Furthermore, August’s trade deficit widened by 29.8%MoM clocking in at US$2.126bn compared to US$1.637bn in July while the SBP-held Fx reserves fell by US$70mn to stand at US$7.8bn as of Sept 1st. Other major news includes, 1) Aug petroleum sales declined 8pc to 1.41m of tons YoY, 2) Aug cement dispatches increased 37.04pc to 4.518m tons YoY, 3) Pakistan public debt surged 22pc to Rs61.75tr in July and 4) IMF allows leeway on electric bills, raises gas prices by 50%. Sector-wise, Close-End Mutual Fund was the worst performer with a 3.21%WoW decline, while Transport, Automobile Parts & Accessories & Inv. banks/Securities cos. Were amongst the top performers, up 8.22%/ 6.01%/5.79%WoW, respectively. Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$2.4mn. On the other hand, Individuals absorbed the selling with a net buy of US$3.6mn. Company-wise top performers: GADT (↑11.4%WoW), DAWH (↑10.9%WoW), ILP (↑9.5%WoW), THALL (↑8.8%WoW), KAPCO (↑8.2%WoW). While the Laggards included JWDS (↓6.7%WoW), ARPL (↓6.6%WoW), BAHL (↓4.5%WoW), EFUG (↓4.5%WoW) and INDU (↓4.3%WoW).

Outlook

Going forward, market is expected to remain range-bound and result of the upcoming MPC meeting on Sept 14th would remain a centerpiece for investors. Furthermore, government’s steps over energy reforms, and next review with the IMF clears the market’s outlook. We continue to advise investors to remain cautious while taking positions and invest in companies with strong fundamentals or high dividend-yielding scrips.