AKD Securities Limited – AKD Daily (01-06-2021)

Karachi, June 01, 2021 (PPI-OT): Pakistan Strategy: May’21 – A month of all-time high volumes

Closing at 47,896pts, KSE-100 index gained 8.1% in May’21 – the highest monthly gain in 9 months. Investors preferring to remain sideways in the earlier part of the month, returned to the bourse after extended Eid holidays and significant curtailment in COVID load, rejoicing positive inklings on the macro front.

Within sectors, Engineering and Cements gained 18.1%MoM and 12.3%MoM respectively on expectation of FY22 budget likely favouring these sectors. OMCs gained 14.3%MoM on the back of potential release of first tranche by Govt. by the end of the week to clear circular debt whereas activity was also seen in the E and P space (+7.2%MoM) after Govt. shelved stake sell in OGDC and PPL.

Flow wise, foreigners cumulatively sold US$43.4mn whereas excluding BYCO transaction where sponsor divested its holding, net sell stood at ~US$7.4mn. Mutual Funds and Banks also followed suit with net sell of US$7.4mn and US$4.7mn respectively. However, the selling was balanced primarily by Individuals and Others with a cumulative net buy of US$43.2mn.

KSE-100 index is expected to continue its bull run boosted by liquidity flush currently prevailing in the market. As such, we advocate for sectors that fall on structural theme metrics (likely to also remain in favour in the upcoming budget) where our preferred sectors are Cements, Steel, and Construction-Allied on construction theme, and Power and select-OMCs (PSO) on payment in lieu of circular debt resolution.

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