After starting the week with a rise of 668points, the market remained volatile and surrendered all gains to ongoing uncertainty on account of COVID-19 pandemic and global commodity price volatility. Ongoing week started with the optimism originated from 200bps rate cut in benchmark interest rate while other positive news flow were the reduction in CAD to USD 6mn, disbursement of USD 1.39bn under Rapid Financing Instrument (RFI) by International Monetary Fund (IMF) and convergence of T-Bills yield in the recent auction with secondary market yields. Moreover, cement sector remained in the limelight during the week as cement manufacturers were able to develop consensus on the pricing front resulting in a PKR50/bag increase in cement prices in North and PKR15/bag in South. Banking stocks also remained in the lime light as State Bank of Pakistan (SBP) directed banks to suspend dividend payments for the two quarters to improve the capital adequacy of the sector. During the week most of the results announced were largely in line with expectations except for ENGRO which announced higher dividend compared to market expectations and HBL which reported higher than anticipated operating expenses.

In the backdrop of aforementioned developments, KSE-100 index close the week at 32,806pts after eroding the initial gains. Market participation during the week saw a decline where ADTO clocked in at 261mn compared to 178mn translating into a upside of 46% WoW while ADTV declined to USD 59.5mn (up 58% WoW). For the week, foreign investors were net sellers with net outflow of USD2.5mn whereas among domestic participants, Mutual Funds and Companies were major buyers with inflows of USD18.4mn and USD5.8mn.

Outlook

Going forward, we opine that the state of lockdown during the holy month of Ramadan will be of key importance to deal with COVID-19. Total number of cases has now reached to 11,155 and increase of public movement during the Ramadan may shore up this number further. On the other hand, ongoing result season is likely to keep investors engaged. Moreover, inflation for the month of April is also likely to set the tone for future interest rate dynamics. We suggest gradual accumulation of fundamentally sound scrips at these levels have the potential to provide significant gain in the medium to long run. Our top picks include, OGDC, POL, HBL, MEBL, LUCK, KOHC, FFC and EPCL. (BMA Capital Management Ltd.)