In the outgoing week, the market remained jittery, even though Pakistan repaid its $1bn international bond on time and Saudi Arabia extended its USD 3bn deposit to the SBP. The Market remained under pressure this week mainly due to uncertainty over the IMF deal and political noise. However, the market turned positive midweek as Russia agreed to sell Oil to Pakistan at a discounted price, but this positive momentum did not sustain. Furthermore, SBP’s foreign exchange reserves data showcased a decline of USD 784mn hitting nearly a four-year low of USD 6.72 billion. With this, the Pak Rupee depreciated during the week against the greenback, dropping by PKR 0.71 | 0.32% WoW to settle at PKR 224.4. The market closed at 42,150 points, down by 452 points (-1.1% WoW).
Sector-wise negative contributions came from i) Cement (109pts), ii) Power Generation & Distribution (61pts), iii) Pharmaceuticals (60pts), iv) Technology & Communication (57pts) and v) Automobile Assembler (45pts). Whereas, sectors which contributed positively were i) Miscellaneous (131pts) and ii) Automobile Parts & Accessories (3pts). Scrip-wise negative contributors were HBL (55pts), SYS (54pts), HUBC (50pts), MEBL (43pts) and MTL (36pts). Meanwhile, scrip-wise positive contribution came from PSEL (137pts), BAHL (33pts), UBL (27pts), BAFL (12pts) and HMB (11pts).
Foreigners selling was witnessed during this week, clocking in at USD 6.3mn compared to a net buy of USD 6.6mn last week. Major selling was witnessed in Commercial Bank (USD 10.3mn), Cement (USD 0.2mn), and All Other Sectors (USD 0.5mn). On the local front, buying was reported by Individuals (USD 8.8mn) followed by Insurance Companies (USD 1.3mn). Average volumes clocked in at 180mn shares (up by 11% WoW) while average value traded settled at USD 18mn (down by 22% WoW).
Other major news: i) Oil prices slump to pre-Ukraine crisis levels, ii) ECC asks Power Division to resolve KE issues, iii) Emirati firm in talks to buy Telenor Pakistan, iv) New estimates place flood losses at $46bn.
Outlook and Recommendation
The equity bourse is expected to remain range bound in the upcoming week as market participants will remain cautious due to the political noise in the country. Furthermore, any positive news coming from Saudi Arabia and IMF 9th review will benefit the market. Our preferred stocks are OGDC, PPL, MARI, MCB, FABL, MEBL, BAFL, LUCK, MLCF, FCCL, ENGRO, FFC, HUBC, PSO and SNGP. The KSE-100 is currently trading at a PER of 4.0x (2023) compared to Asia Pac regional average of 12.9x while offering a dividend yield of ~10.2% versus ~2.8% offered by the region.
Courtesy – AHL Research