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AKD Securities Limited – Stock Smart (January 13, 2023)

Karachi, January 13, 2023 (PPI-OT): Weekly Review

The index witnessed an overall volatile week, as news flows of reserves falling below US$4.5bn dampened overall sentiment, alongside the obvious political ruckus regarding Punjab Assemblies. Although, some respite was witnessed on the back of pledges obtained in the Climate conference in Geneva, with the country wracking up over US$10bn worth of commitments from friendly nations and international FIs. To note, KSE-100 Index lost 684 points during the week, depicting a drop of 1.67% in the period, settling at 40,323 points. Overall, participation in the market improved with average trading volumes clocking in at 183mn shares, compared to 176mn shares traded in the earlier week, depicting a gain of 4%WoW.

Volume leaders during the week were as follows: PPL/WTL/PRL/CNERGY/KEL with 62/56/52/47/44mn shares, respectively. On the currency front, the PkR weakened by ~PkR1 against the US$, depicting a fall of 0.44% with the interbank quote ending at PkR228.15/US$ on Friday. Other major news flows during the week included; 1) SBP’s foreign exchange reserves sink to three weeks’ worth of import cover, 2) UAE to lend $1 billion and roll over an existing $2 billion loan, 3) Deal signed with SFD to finance oil derivatives worth $1bn, 4) Dissolution summary of Punjab Assembly had sent to Governor Punjab, PTI also announce to dissolve KPK Assembly on Saturday, 5) FM Ishaq Dar reiterated the country’s commitment to completing the IMF programme. Sector-wise Vanaspati and Allied Industries, Close-End Mutual Fund and Miscellaneous were amongst the top performers, up 7.3%/5.8%/3.4%WoW, respectively.

On the other hand, Leather and Tanneries, Leasing Companies and Pharmaceuticals were amongst the worst performers registering a decline of 7.2%/5.6%/5.3%WoW, respectively. Flow wise, major net selling was recorded by Mutual Funds (net sell: US$4.7mn). On the other hand, Individuals absorbed most of the selling with a net buy of US$6.5mn. Company-wise, top performers during the week were, i) MTL (+8.0%WoW), ii) PSEL (+7.3%WoW), iii) LOTCHEM (+5.7%WoW), iv) JVDC (+5.4%WoW), and v) NESTLE (+4.6%WoW), while top laggards were, i) INIL (down 10.9%WoW), ii) SRVI (down 10.4%WoW), iii) ABOT (down 9.3%WoW), iv) NRL (down 9.2%WoW), and v) TRG (down 9.1%WoW).

Outlook

The market is expected to remain under pressure in the near future, driven by concerns regarding the country’s external position and uncertainties stemming from the political situation brewing in Pakistan. Furthermore, the upcoming Monetary Policy meeting would remain in the limelight, expected to be held on January 23, 2023. Any newsflow regarding foreign inflows, whether from the IMF or other bi-lateral and multilateral sources, would support the market trajectory. Additionally, clarity on the political landscape in the country would alleviate investor concerns. Consequently, we expect the market to remain range-bound until there is further clarity on the economic and political fronts. Therefore, we continue to advise a cautious approach while building positions in the market.

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