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Stock Smart Weekly (Oct 15, 2021)

StockSmart                       

Weekly Review                                

The feel good factor returned as the weekly performance of the index closed in green. The benchmark index gained 345 points during the week to close in at 44,822 point level, up 0.8%WoW. Building anticipation of revival of IMF program and likelihood of civil-military leadership reaching consensus over the appointment of new ISI chief fueled the market performance. Commercial Banks emerged as the outperformers during the week amid increased likelihood of further rate hikes in the up coming MPS, gaining 3.6%WoW, followed by Pharmaceutical and Cement sectors, up 2.0%WoW and 1.6%WoW, owing to revision in prices. Participation during the week improved with average daily traded volume standing at 342mn shares against 266mn shares witnessed during last week. Sector-wise, Cement prices increased by PkR35-45/bag to PkR690-710/bag whereas Automobile sales jumped 68%YoY to 82k units. Other major news flow during the week included i) GoP agreeing to withdraw GST exemptions worth PkR334bn in order to revive IMF program, ii) Country receiving US$8bn in remittances during 1QFY22, up 12.5% iii) Country retiring foreign Sukuk worth US$1.0bn , iv) Cotton prices surging to PkR14.5k per mound in local market, v) Expats invested US$2.4bn in RDA, and vi) ENGRO planning to invest US$1.5—US$1.8bn under petrochemical policy. Top performers of the market included i) GATI (+15.6%WoW), ii) ABL (+14.1%WoW), iii) FFBL (+13.6%WoW), iv) HBL (+8.0%WoW), and v) LOTCHEM (+7.4%WoW). Meanwhile laggards included: i) HASCOL (-20.1%WoW), ii) KAPCO (-15.1%WoW), iii) ANL (-15.1%WoW), iv) TRG (-14.7%WoW), and v) JLICL (-10.3%WoW). Top volume leaders included WTL (213mn), UNITY (92.3mn), TELE (89mn), TREET (81.4mn) and HASCOL (62.6mn). Flow wise, Insurance remained the major buyers with (net buy of US$12.2mn) followed by Mutual Funds (net buy of USD3.4mn) while Companies stood on the other side with (net sell of US$3.3mn) followed by Individuals (net sell of US$3.2mn). 

Outlook

With the onset of the result season, the market performance will be dictated by the corporate profitability where we expect the earnings to grow by 8%YoY - 10%YoY. Furthermore, the formal announcement of the new ISI head will also help settle jitters on the bourse. GoP is also under negotiations with IMF to revive its plan where any developments on the hike in energy tariffs and withdrawal of tax exemptions will also be closely tracked. Market participants should look to invest in the Banks where possibility of further interest rate hikes could bring the sector into limelight. Major result announcements during  week include, PTC, SSGC, PABC and UBL.

AKD Research