Karachi, November 12, 2021 (PPI-OT): Weekly Review

In a failed attempt to carry the positive momentum, as witnessed in previous weeks, KSE-100 index continued its negative trajectory, closing at 45,749pts. In the outgoing week, the index cumulatively lost 1,547pts or 3.27%WoW where market remained volatile throughout the week. Market witnessed across the board selling as investors remained uncertain on the news that IMF talks have remained inconclusive and hinged upon stamped clearance of two IMF departments (Strategy, Policy, and Review Department (SPRD)) while political uncertainty on various fronts, concerns over rising inflation and PkR depreciation against dollar also played over market sentiments.

Participation during the week remained dull with average daily traded volume standing at 316mn shares against 430mn shares witnessed during last week. Sector-wise, steel CRC prices increased by PkR3K/ton to PkR246K/ton and DAP prices increased by PkR340/bag to retail price of PkR8,100/bag. Other major news during the week were, i) Pakistan’s overall fiscal deficit in 1QFY22 dropped to 0.8% of Gross Domestic Product (GDP) to PkR438.5bn, ii) Adviser on Finance Shaukat Tarin stated that income tax and GST would have to be paid by traders in order to have a right to vote, iii) The Asian Development Bank (ADB) has plans to provide Pakistan with about US$10bn in fresh assistance for various development projects, iv) Fertilizer supply up 10%YoY to 5.1mn tons in 10MCY21, v) Nepra allows Discos PkR2.53 hike in tariffs for Sep’21 under fuel cost adjustment, and vi) Auto sales posted robust growth in 4MFY22 where total industry sales ballooned by 61%YoY to stand at 109,238 units.

Flow wise, Companies remained the major buyers with (net buy of US$6.5mn) followed by Insurance Companies (net buy of US$5.72mn) while Individuals stood on the other side with (net sell of US$10.24mn) followed by Foreigners (net sell of US$5.28mn). Stock wise, major performers were, i) GATI (+6.7%WoW), ii) MUREB (+4.6%WoW), iii) FFC (+2.8%WoW), iv) EFERT (+1.6%WoW), v) LOTCHEM (+1.4%WoW), while laggards were, i) SFL (down 23.3%WoW), ii) ATRL (down 13.9%WoW), iii) HCAR (down 11.3%WoW), iv) HASCOL (down 10.8%WoW), and v) KTML (down 10.6%WoW).

Outlook

Market is going to watch host of events closely where ongoing negotiations with IMF remain paramount and an agreement there will provide a much-needed trigger for the market. However, political uncertainty on various fronts still remains with opposition parties threatening to stage protest across the country. Moreover, other key factor influencing market performance is monetary policy which is due to be announced towards the end of the month. We continue to advocate thematic plays which include Banks (on monetary tightening), Construction-driven sectors (Cements, Steel), and Textiles (on devaluations and strong export prospects).