Robust performance of the local bourse and positive investor sentiment continued going into February wherein the KSE index surpassed the 47K level during the week, which was last witnessed in Aug-17. The first day of the week saw the index face downward pressure to close at 46,248 points, below its previous week closing of 46,386 points. However, the following days pulled the index back to around 500 points above previous week close. Thus, resulting in a +1.2% surge WoW to settle at 46,934 points.

A warm welcome for Covid vaccine: In addition to the 0.5Mn doses of Sinopharm vaccine that arrived earlier this week from China, Pakistan has secured a contract of 17Mn doses of AstraZeneca vaccine, out of which 7Mn doses will be available to the front-line workers and senior citizens in 1QCY21. This improved the investor sentiments and positively impacted the markets.

Selling spree of foreign investors continues: During the week, investor participation declined by 17.6% with average volumes clocking-in at 554Mn, while the average traded value increased by 1.3% WoW to reach USD 171Mn. Increase in traded value despite shrinkage in volumes was attributed to greater volumes in index heavy sectors (Oil, banks and Power). Over the course of the week, foreign investors continued to offload positions as the net sell clocked-in at USD 2.73Mn. This selling was mainly absorbed by local individuals and companies with inflows of USD 9.6Mn and USD 6.7Mn respectively.

Data releases remained exciting during the week: Key data released during the week includes the following: 1) Inflation clocked in at 5.7% for Jan-21 which was below market consensus of 6% credited to subsiding food prices; 2) fiscal deficit numbers which clocked-in at 2.5% of GDP compared to 2.4% last year; and 3) increased inflow into Roshan Digital accounts which have now surpassed USD 400Mn.

Overall news flow supported market sentiment: Other notable events during the week included: 1) Export numbers for Jan’21; which clocked in at $2.14Bn up 8% MoM; 2) Oil Marketing Company sales for Jan’21, which were reported at 1.52Mn tons, up 12.4% YoY; and 3) PIB auction was also held during the week in which the government sold PKR 62.1Bn against target of PKR 100Bn.

Outlook

Moving forward, we anticipate the market to sustain its positive momentum given the fast pace of global vaccine rollout, stable value of rupee against the greenback, accommodative monetary policy stance and improving macroeconomic indicators. We reiterate Banks, E&Ps, Fertilizers, Autos and Cements as our preferred sectors for the current calendar year.