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AKD Securities Limited – Stock Smart (November 18, 2022)

Karachi, November 18, 2022 (PPI-OT): Weekly Review

Uncertainties regarding the country’s liquidity position and ongoing political uncertainties kept the market range bound during the week, with the KSE-100 index settling down by 362.71 pts or 0.84%WoW at 42,730pts. Participation in the market was substantially this week, with daily traded volumes averaging ~186.3mn shares during the week, compared to ~251.1mn shares in the prior week, depicting a drop of 25.8%WoW. Moreover, the PkR lost footing against the US$ in the week, devaluing by 0.68% over the period.

Other major news flows during the week were; i) Talks between IMF, Pakistan ‘rescheduled’, ii) Saudi Arabia’s Crown Prince’s visit to Pakistan was postponed, iii) Remittances were recorded at PkR2.2bn for the month of Oct’22, iv) World Bank to provide $1.3 billion to Pakistan for emergency, agriculture and housing relief, v) Govt raises Rs757bn from T-bills, vi) LSM posted a 0.4%YoY decline in 1QFY23, vii) Jul-Oct textile group exports down 1.34pc YoY, and viii) Circular Debt Management Plan was turned down by the Finance Ministry.

Sector-wise, the top performing sectors were; i) Leasing Companies (+4.1%WoW), ii) Chemicals (+2.7%WoW), and iii) Fertilizers (+1.8%WoW), while the least favourite sectors were; i) Miscellaneous (-6.3%WoW), ii) Vanaspati and Allied Industries (-4.4%WoW) and iii) Sugar and Allied Industries (-4.4%WoW). Stock-wise, top performers were; i) LOTCHEM (+6.7%WoW), ii) FCEPL (+5.5%WoW), iii) ENGRO (+5.0%WoW), iv) GHGL (+4.9%%WoW), and v) TRG (+4.1%WoW), while laggards were; i) UNITY (-17.5%WoW), ii) PSEL (-13.3%WoW), iii) KTML (-6.4%WoW), iv) GATM (-5.6%WoW), and v) ILP (-5.3%WoW).

Outlook

The market is expected to remain range-bound in the near future, clouded by concerns regarding the liquidity position of the country (International Sukuk maturing on December 5, 2022) and the outcome of the IMF discussions. Furthermore, the capital markets would be taking further cues from the Monetary Policy, scheduled for November 25, 2022. Any news regarding foreign inflows will be well-received by the market, easing off sovereign liquidity concerns. Moreover, the economic slowdown in the country-an intended outcome of the SBP’s contractionary policies-and post-flood slowdown in economic activity is likely to keep corporate earnings in check going forward. Hence, we advise clients to stay cautious while building new positions in the market.

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