The market performance is likely to remain range-bound given the year-end phenomena where the volumes appear to ease off slightly before the new year. The market is also expected to watch the developments related to the announcement of the mini-budget closely. The market is also likely to closely track the secondary market yield movements where the central bank, through its recent open market operations, flushed the banking industry with liquidity which helped bring down the yields on GOP papers by up to 80bps.
Last week activity
The market remained flat throughout the week, gaining 0.5%WoW to close in at 44,118 points level. This took the cumulative performance throughout CY21 to 0.8%, whereas the dollar adjusted return currently stands at –ve 9%. Volumes dried up significantly on WoW bases where ADT was recorded at 215mn shares instead of 265mn shares, down 18.7%WoW.
The performance during the week was dictated by the news-flows related to possible resumption of the dormant IMF program, the pre-conditions related to the program and the law-making the country needs to do in order to unlock the flows.
To this end the GoP. Major news released during the week were i) CAD numbers for Nov’21 where the final number settled around US$1.9bn as opposed to expectations of US$2.5bn, ii) GoP approved textiles and auto policies, iii) GoP missing petroleum levy target by 41%, iv) US$1.5bn loan approved by ADB for the power sector reforms and v) GoP increasing the base tariff by 95paisas. Other key market related news during the week were i) Wilmar increasing its stake in unity to 15.1%, ii) cellular subscribers increased to 106.68m as per PTA’s latest report, iii) fertilizer shortage in Sindh and Punjab to hit wheat production in the country, iii) GVGL looking to enter auto assembling business, iv) Auto financing hits PkR350bn mark.
Top performers of the market included i) BNWM (+20.4%WoW), ii) HCAR (+14.8%WoW), iii) TRG (+11.0%WoW), iv) PSX (+9.3%WoW), and v) ABOT (+7.2%WoW). Meanwhile laggards included: i) ARPL (-15.1%WoW), ii) SFL (-13.1%WoW), iii) GATI (-12.9%WoW), iv) COLG (-11.0%WoW), and v) JDWS (-7.4%WoW). In terms of the top performing sectors, Power generation (news of payment of outstanding dues) was the top performer, returning 4%WoW, followed by Pharmaceutical sector (news of revision in drug prices) which returned 3.7%WoW and Textile spinners (soaring yarn margins) which returned 3%WoW. Flow wise, Foreigners continued turned net buyers with an inflow of US$3.7mn, cushioning the sell-off by Mutual funds (US$3.6mn), and Individuals (US$2.6mn).
Courtesy – AKD Research