KSE may post a strong rally going forward

· KSE-100 index returned 2.9%MoM during the month of Oct’21 while the US$ adjusted return during the month clocked in at 2.3% as PkR depreciated by 0.6%MoM against the Greenback. Resolution of civil-military relationship, announcement of Saudi support package and increasing likelihood of an agreement between IMF and authorities to revive the plan were the key triggers.

· Flow wise, Foreigners continue to exit Pakistan’s traditional sectors with a net sell of US$31mn where Commercial Banks and Fertilizers saw the highest net outflow of US$25.3mn and US$23.3mn respectively.

· KSE-100 index profitability grew by 21%YoY during the quarter where the key outperformers turned out to be engineering sector (profitability up by 352%YoY) and Textiles (profitability up by 163%YoY). Other honorable mentions include Autos (NPAT up by 130%) and Cements (NPAT up by 33%YoY).

· KSE-100 index has returned –2.4%FYTD, but may be primed to post a strong rally going forward. Things are finally looking up after rapid PkR depreciation halted by Saudi support package, building expectations about IMF and authorities reaching consensus regarding the revival of US$6.2bn program and ease off in coal prices. We advocate building positions in Banks (potential DR hike), Cements (coal prices coming off and increasing cement prices), Textiles (attractive valuations) and Fertilizers (FFBL on possible reclassification in Islamic index).

Courtesy- AKD Research

Sharing is caring

Leave a Reply