Monetary policy for next two months is set to be announced in the coming week where AKD expects Status Quo in the policy rate at 9.75%. However, any negative surprise cannot be ruled out given sharp increase in oil prices which can keep market volatile and hence a closer look is warranted. Overall, we see IMF program resumption setting the tone for the market in the near term, and hence accumulation is advised on any dips as the Govt. seems determined to meet all prior actions.
We advocate for building positions in Commercial Banks, Technology companies, Cements, Steel, and Construction-Allied.
Putting an end to 6W streak of positive returns, KSE-100 index closed at 45,018pts, down 1.63%WoW as a sharp increase in oil prices (+12.7% since the start of the month) due to geopolitical risks in the Middle East, and widening Credit Default Spread (CDS) on Pakistan’s Govt. bonds dented investor sentiments amid lack of triggers. Avg. volumes also dried up, with volumes in the current week standing at 201.2mn shares compared to 355.6mn shares in the previous week. During the week, activity shifted slightly to small-cap stocks from mainboards as indicated by KSE-100 to KSE-All volume compressing to avg. 75.0% compared to 82.3% in the previous week.
Major news flows during the week were, i) Govt. revising up FY21 GDP growth to 5.37% against provisional estimate of 3.94%, ii) rising COVID cases with positivity rate at the end of the week reaching 12.9% and positive cases at 7,678 pushing authorities to take measures to contain the spread, iii) remittances clocked in at US$2.5bn for Dec’21, continuing to cushion Pakistan’s external account, iv) authorities kicking off process to issue Sukuk bond of US$1bn, and v) Refineries issuing warning of inventory buildup of Furnace Oil due to lower offtake by power plants.
Sector-wise, within mainboard, E&P sector stood as the top performer with a gain of 0.4%WoW while the Techs (down 4.6%WoW) stood as the major underperformer, whereas overall, REIT turned out to be top gainer with a return of 3.6%WoW and Refineries as the top laggard with a negative return of 10.0%WoW. Flow-wise, Foreigners stood as net sellers with a sell-off of US$2.0mn, together with Companies and Mutual funds net sell of US$10.3mn and US$7.8mn respectively. On the other side of the scale, Individuals and Banks were the major buyers with a net buy of US$12.3mn and US$5.9mn respectively. Stock wise, top gainers were, i) KAPCO (+8.4%WoW), ii) FCEPL (+4.8%WoW), iii) DCR (+3.6%WoW), iv) GSKCH (+2.9%WoW), and v) GADT (+2.8%WoW) while top laggards were, i) TRG (down 18.6%WoW), ii) ANL (down 12.0%WoW), iii) CNERGY (down 11.0%WoW), iv) JDWS (down 10.4%WoW), and v) ATRL (down 8.8%WoW).
Courtesy – AKD Research