EUR 13.65 For Business Accounts Only

Stock Smart Weekly (Sep 22, 2023)

Weekly Review                                

The index experienced a somewhat lackluster week in terms of trading volumes overall. This was primarily due to anticipation surrounding the MPC decision during the mid-week, coupled with expectations of rising CPI in Sep'23 amidst dual fuel price hikes during the month. However, MPC’s decision came in as a surprise as the central bank kept rates unchanged, citing falling inflationary expectations for the remainder of the fiscal year post-Oct’23. On the external front, country’s FX reserves remained relatively flat, ending at US$7.69 vs. US$7.64bn in the week before. Additionally, the domestic currency continued to strengthen against the greenback, ending the week at PkR291.76/USD (down 7.6%WoW). Internationally, oil prices continued gaining ground, with Brent ending the week at US$94.03/bbl. This was largely driven by persistent supply cuts by major producers i.e. Russia and KSA and overall China’s economic recovery, adding further momentum to the global commodity.

Overall, average trading volumes remained down by 13.4%WoW, clocking in at 139mn shares, compared to 160.6mn shares traded in the earlier week. The benchmark KSE-100 Index gained 6674 points during the week, depicting a 1.46% increase in the index. Other major news flows during the week were; 1) Caretaker setup hikes price of petrol by Rs26, HSD’s by Rs17.34, 2) ‘Baseless and fabricated’: FO rejects report on Pakistani arms sale to Ukraine to secure IMF bailout, 3) IMF raises concerns over petrol smuggling, seeks report from finance ministry, 4) T-bill yields tumble as govt raises Rs2.4 trillion in auction, and 5) GST evaded through flying invoices estimated at PkR5-6tn. Sector-wise, amongst mainboards, Transport, Leasing Companies and Close ended MFs were amongst the top performers, up 9.7%/8.7%/5.65% WoW respectively. On the other hand, Vanaspati and allied industries, Insurance and Automobiles were amongst the worst performers with a declines of 1.7%/0.5%/0.4% WoW. Flow wise, major net selling was recorded by Insurance (net sell: US$1.3mn) and Brokers (net sell: US$1.1mn). On the other hand, Individuals and Other organizations absorbed most of the selling with a net buy of US$2.3mn and US$1.1mn. Company-wise, top performers during the week were, i) PGLC (+14.7%WoW), ii) LOTCHEM (+12.3%WoW), iii) UNITY (+11.7%WoW), iv) SCBPL (+10%WoW), and v) GADT (+10%WoW), while top laggards were, i) MUREB (down 7.4%WoW), ii) UPFL (down 5.4%WoW), iii) ATHL (down 3.7%WoW), iv) PIOC (down 3.0%WoW), and v) MUGHAL (down 2.5%WoW).

 

Outlook

Market’s trajectory is expected to be majorly driven by CPI readings in the coming few months alongside further clarity on IMF's upcoming review. However, in the near term, appreciating  currency alongside higher expectations of remittances during Sep’23 are expected to keep investors optimistic. Overall, we continue to advise a cautious approach while building positions, with investments only focused on dollar-driven and high dividend-yielding companies.