Outlook

With GoP successfully striking a deal with IMF to revive the dormant program, thereby unlocking US$1.0bn in loan, the in investor confidence will only pick and will likely translate into positive performance of the index. Also, GoP planning to raise further money through Eurobond auction, the currency will likely gain further ground against US$, having earlier depreciated to 180/US$. Moreover, the result season is in full swing where we expect corporate profitability to remain buoyant amid i) commodity bull run, ii) robust exports growth and iii) PkR depreciation. With valuations at very attractive levels, market may be set to post a sustainable bull run.

Weekly Review

After gaining 1.8%MoM during Jan’22, the positive momentum continued during the first week of Feb’21 with index gaining 1.85%WoW with the anticipation (and finally announcement) of agreement with IMF to revive the program setting the tone. Market participation, as picked by Avg. daily turnover, picked up significantly as well with trading volumes increasing 54%WoW to stand at 289.1mn shares compared to 187.4mn shares seen during the previous week. During the week, activity shifted slightly to small-cap stocks from mainboards as indicated by KSE-100 to KSE-All volume compressing to avg. 75.0% compared to 82.3% in the previous week. Major news flows during the week were, i) GoP and IMF finally striking a deal to revive US$6bn program where IMF will disburse US$1bn immediately, ii) Country raising another US$1.0bn through issuance of Sukuk in international bond market where the issue was subscribed by over 2x, iii) Inflation during the month of Jan’22 clocking in at 13.0% which was slightly above the estimates and iv) PBS releasing export and import numbers for the outgoing month of Jan’22 where the trade deficit eased-off considerably to US$3.4bn (down 30%MoM from US$4.8bn it clocked in Dec’21). In terms of top performing sectors, within mainboard, Textile weaving ran out clear winner with a gain of 7.2%WoW while the Power Generation sector (down 3.0%WoW) stood as the major underperformer. OMCs (up 6.4%WoW), Chemicals (up 4.2%MoM) and Refineries (up 4.1%MoM) also posted solid returns during the week. Flow-wise, Foreigners stood as net sellers with a sell-off of US$4.4mn, while Insurance also offloaded holdings worth US$4.01mn during the week. On the other side of the scale, Other Organizations, Mutual Funds and Banks were the major buyers with a net buy of US$3.91mn, US$2.97mn and US$2.11mn respectively. Stock wise, top gainers were, i) SHEL (+16.5%WoW), ii) PAEL (+16.1%WoW), iii) NML (+9.4%WoW), iv) COLG (+7.2%WoW), and v) ATRL (+6.5%WoW) while top laggards were, i) HUBC (down 8.6%WoW), ii) SML (down 4.7%WoW), iii) CEPB (down 4.2%WoW), iv) ISL (down 2.3%WoW), and v) FHAM (down 2.2%WoW).

Courtesy – AKD Research