KSE-100 Index exhibited mixed momentum throughout the week, closing with a modest weekly gain of 0.4%WoW at 78,570 points. The week began on a turbulent note, primarily due to concerns about global markets following Japan’s interest rate hike. However, a rebound in the E&P sector, spurred by a surprising payout from MARI, revitalized market sentiment in the last two sessions. Investor confidence was further strengthened by debt rollover commitments during the week, aligning with IMF prerequisites before the Executive Board meeting expected later this month. Additionally, T-bill yields dropped by 50-54 bps in the latest auction on Wednesday, signalling investor anticipation of rapid rate cuts in upcoming MPC meetings. This decline in T-bill yields consequently led to KIBOR rates hitting 18-month lows. On the macroeconomic front, remittances for Jul’24 clocked in at US$3.0bn, up 45%YoY, cementing a positive outlook for the current account balance for the ongoing year. Meanwhile, the energy sector remained a focal point of public discourse amid rising power prices, prompting the government to establish an energy task force and announce plans to retire/gradually phase out 15 IPPs. Furthermore, the ECC directed the relevant ministry to formulate a fertilizer policy to address concerns over production, pricing, and the provision of gas, which might result in unifying gas prices across the industry.
Despite initial volatility in the market, participation surged by 38%WoW, with the avg. Daily traded volume rose to 493mn sh vs. 358mn sh the previous week. On the currency front, PkR largely remained flat against the greenback throughout the week, closing the week at 278.55/US$. Other major news flows during the week included 1) Cement sales fall 7% as economic activity slows, 2) SBP forex reserves rise by $51 million to $9.15 billion, 3) SIFC hopeful of foreign investments once IMF deal is done, and 4) Govt mulling raising GST on tractors to 14pc. Sector-wise, Woollen, Textile weaving, and Textile spinning were among the top performers, up 16.9%/6.7%/5.3%WoW, respectively. On the other hand, Vanaspati & allied industries, Property, and Fertilizer were amongst the worst performers with a decline of 3.9%/2.7%/2.5%WoW. Flow-wise, Mutual Funds recorded major net selling with a net sell of US$6.0mn. On the other hand, Individuals absorbed most of the selling with a net buy of US$5.5mn. Company-wise, top performers during the week were i) YOUW (up 38.2%WoW), ii) BNWM (up 28.5%WoW), iii) MARI (up 20.1%WoW), iv) SNGP (up 11.0%WoW), and v) APL (up 7.8%WoW), while top laggards were, i) PIBTL (down 7.9%WoW), ii) AKBL (down 7.8%WoW), iii) BAHL (down 6.3%WoW), iv) FFC (down 6.0%WoW), v) ATRL (down 4.7%WoW).
Outlook
Looking ahead, the market is expected to continue its positive momentum as global market concerns settle and macroeconomic indicators remain favorable. Additionally, the anticipated IMF Executive Board approval during the month is likely to support the momentum. Sectors benefiting from monetary easing and structural reforms would remain in the limelight. However, modest economic recovery would keep the upside in check for the cyclicals. Our top picks include OGDC, PPL, MARI, MCB, UBL, MEBL, FFC, LUCK, FCCL, and INDU.
Courtesy- AKD Research
