Domestic political unrest together with opposition’s planned long march against the government, is likely to keep the bourse under pressure. A key event to look out for is the OIC meeting. On the international front, any de-escalation by Russia and successful negotiation with the West may push the commodity prices down, which will improve sentiment of the local bourse.
Our preferred stocks are OGDC, PPL, MARI, HBL, MCB, UBL, MEBL, FABL, LUCK, MLCF, FCCL, ENGRO, FFC, HUBC, PSO, INDU, ILP, EPCL, and ASTL.
The KSE-100 is currently trading at a PER of 4.7x (2022) compared to Asia Pac regional average of 12.4x while offering a dividend yield of ~9.2% versus ~2.4% offered by the region.
Market Commentary
The domestic bourse commenced on a negative note amid investor’s concerns over the outcome of probable Russia Ukraine war together with prevailing political tensions within the country. Albeit, net buying was observed mid-week as the investor’s cheered a dip in global oil prices (WTI and Brent fell below USD 100/bbl. mark) together with peace talks between Russia and Ukraine. In particular, the cement sector remained in limelight following a decline in coal prices. Albeit, as the week neared its end, the bourse failed to sustain gains on the back of rupee weakening to its historic low, breaching the 180 mark, and resumption of surge in oil prices. The market settled at 43,030pts, losing 777 points (down by 1.42%) WoW.
Sector-wise negative contributions came from i) Oil & Gas Exploration Companies (310pts), ii) Bank (127pts), iii) Technology & Communication (79pts), iv) Oil & Gas Marketing (42pts), and v) Cement (39pts). Whereas, sectors which contributed positively were i) Fertilizer (96pts), ii) Food & Personal Care Products (15pts) and iii) Leather and Tanneries (14pts). Scrip-wise negative contributors were PPL (140pts), OGDC (103pts), TRG (84pts), HBL (63pts) and MCB (43pts). Meanwhile, scrip-wise positive contribution came from FFC (91pts), EFERT (58pts) and BAHL (32pts).
Foreign selling continued this week, clocking-in at USD 4.90mn compared to a net sell of USD 3.13mn last week. Major selling was witnessed in Banks (USD 6.0mn) and OMC’s (USD 0.7mn). On the local front, buying was reported by Banks/DFIs (USD 4.4mn) followed by Companies (USD 2.9mn). Average volumes clocked-in at 174mn shares (down by 19% WoW) while average value traded settled at USD 26mn (down by 32% WoW).
Other major news: i) Long-term govt securities: cut-off yields soar to 115bps, ii) PM lauds ADB’s role in socio-economic development, iii) ‘Long march’ to reach capital by evening of 25th: Fazl, iv) POL prices unchanged, v) Drug makers threaten to close 600 factories next week, vi) $21bn support request; Ministry seeks update from Pak envoy in Beijing, vii) PML-N urges SC to take suo motu notice and, viii) Wheat support price raised, fertilizer subsidy approved.
Courtesy- AHL Research