Karachi, February 01, 2019 (PPI-OT): Weekly Review
KSE-100 index witnessed dull sessions in the last week of Jan’19, with monetary announcement of 25bps hike pulling-up KSE-100 index (+0.8% on Friday) to close at 41,112.7pts (+2.1%WoW). Budget developments continue to favourably impact the auto sector, where PSMC/INDU gained 27.6%/3.1%WoW on abolishment of ban on non-filers in the below 1300CC segment. Other major news flow during the week were, i) IMF related developments where Finance Minister hinted on the fund softening stance, ii) Cabinet approving issuance of “Pakistan Banao Certificate” to raise US$500mn and iii) Power division allowed to raise PkR200bn to reduce circular debt.
Foreigners continue to find market attractive with weekly inflow of US$12.3mn, with activity concentrated in Banks (US$7.68mn), E and P (US$1.65mn), and Cements (US$1.28mn). On the flipside, mutual funds opted for profit taking disposing off US$5.33mn, followed by Banks, US$2.99mn. Average volumes for the week stood at 174.84mn vs. 168.46mn in the previous week. Major upward movers in AKD universe are, i) PSMC (+27.6%), ii) HASCOL (+11.4%), iii) ASTL (+8.36%), iv) EFOODS (+7.43%), and v) PSO (+5.77%), whereas laggards are, i) FFBL (-5.65%), ii) FATIMA (-1.42%), iii) POL (-0.46%), iv) FFC (-0.38%), and v) NBP (-0.25%).
The recent monetary policy announcement indicates continuation of monetary tightening but in a gradual pace. Further, we do not rule out another round of exchange rate adjustment. In this backdrop, we advise investors to take positions in thematic exposure in Banks, E and P, selected power and textile plays. We expect volatility to be the central theme in the short run in the market until clarity emerges on the IMF and advice investors to take longer investment horizon and build positions on dip.