Market Commentary
During the week, the market experienced a mixed sentiment, yet ultimately concluded on a positive note, closing at the highest-ever index of 70,910 points. The positive momentum was driven by indications from a delegation led by Saudi Arabia’s foreign minister, suggesting investment and development prospects in the country. Additionally, the IMF reaffirmed its support for Pakistan’s economic reform agenda. Furthermore, foreign exchange reserves inched up by USD 14mn, reaching 8.1bn. Meanwhile, PBS data reported a 4% MoM decline in the LSM Index during the Feb’24. Moreover, the power generation in Mar’24 reduced by 8% YoY. During the week PKR closed at 278.31 against USD, depreciating by PKR 0.37 | 0.13% WoW. Albeit, the market closed at 70,910, gaining 595 points (up by 0.85%) WoW.
Sector-wise positive contributions came from i) Commercial Banks (436pts), ii) Oil & Gas Exploration (167pts), iii) Power (161pts), iv) Refinery (43pts), and v) Oil & Gas Marketing companies (30pts). Meanwhile, the sectors which contributed negatively were i) Technology & Communication (118pts), ii) Pharmaceuticals (31pts) & iii) Engineering (30pts), Miscellaneous (30pts), and Automobile Assembler (26pts). Scrip-wise positive contributors were HUBC (147pts), UBL (135pts), OGDC (114pts), HBL (100pts), and BAFL (94pts). Meanwhile, scrip-wise negative contributions came from MEBL (98pts), SYS (63pts), ENGRO (39pts), PTC (37pts), and FFC (31pts).
Foreigner buying continued during this week, clocking in at USD 33.9mn compared to a net buy of USD 4.2mn last week. Major buying was witnessed in All other sector (USD 32.1mn) and Commercial banks (USD 2.9mn). On the local front, selling was reported by Individuals (USD 14.4mn) followed by Banks/DFIs (USD 11.0mn). Average volumes arrived at 492mn shares (up by 36% WoW) while the average value traded settled at USD 77mn (up by 31% WoW).
Other major news: i) Petrol price up by Rs4.53 per litre, diesel Rs8.14 ii) Textile exports increased by 3.3% (YoY), iii) Auto Sales declined by 3% MoM I 1% YoY, iv) Power generation drops 8.2pc YoY, and v) Attock Cement starts up new plant.
Outlook and Recommendation
The market will closely monitor the developments related to potential investments by Saudi Arabia and the Extended Fund Facility (EFF) program by the IMF. With the ongoing result season, certain scrips are anticipated to be in the limelight amid the expectation of robust results. Our preferred stocks are OGDC, MARI, MCB, UBL, MEBL, FABL, HBL, LUCK, MLCF, FCCL, FFC, HUBC, PSO and INDU. The KSE-100 is currently trading at a PER of 4.6x (2024) as compared to its 5-year average of 5.6x offering a dividend yield of ~9.8% as compared to its 5-year average of ~7.6%.
Courtesy – AHL Research
