Outlook

Market is expected to look forward towards IMF board’s approval for resumption of program particularly after mini budget has been passed by the parliament which was a major pre-requisite for resumption. In the near term, the upcoming MPS on Jan 24th, 2022 would determine market direction along with IMF, where the Central Bank while have indicated to pause interest rate cycle but any further tightening given already higher trade deficit for Dec’21 and uptick in commodity prices could result in distressed stock performance in the short run.

We continue to advocate for gradual accumulation on any weakness where our preferred sectors include, Banks, Cements, Fertilizers, Consumer plays (such as PREMA), and select-Techs.

Weekly review

Market started off the week on a good note with KSE-100 increasing by 1.2% in first trading session of the week where banks led the rally as investors factored in prospects of improvement in profitability on the back increasing interest rates. To note, banking sector remained among top performers during the outgoing week and increased by 2.5% on the back of aforementioned reason. However in later sessions, profit taking was witnessed as market hovered around the 46k level while some jitteriness was also witnessed on the back of increasing international oil prices and Pakistan requesting IMF to shift board meeting for approval towards tail end of Jan’22.

Overall, KSE-100 closed the week at 45,763pts, up 0.92%WoW while average daily turnover stood at 356m shares against 318mn share last week. Other important news flows during the week were, i) Economic Coordination Committee (ECC) of the Cabinet allowing the import of 50,000 metric tons of urea from China on government-to-government (G2G) basis, ii) Country’s circular debt reaching PkR2.4tn mark during 5MFY22, iii) Sale of passenger cars witnessing an upsurge of 59.4%MoM during Dec’21, clocking in at 24,462 units as opposed to 15,351 units sold in Nov’21, and iv) National Assembly passing the Finance (Supplementary) Bill, 2021 and the State Bank of Pakistan (Amendment) Bill, 2021. Sector-wise, within major sectors, Textile Composite recorded a gain of 4.4%WoW, followed by Chemical (+4.2%WoW) while Cement was down 0.9%WoW.

Flow-wise, Foreigners’ net buy stood at US$0.53mn while on the local side, Mutual Funds stood on the selling side with a net sell of US$9.95mn followed by Companies with a net sell of US$2.46mn whereas banks turned out to be on the other side of the spectrum with a net buy of US$6.84mn. Stock wise, major gainers include, i) FABL (+10.5%WoW), ii) HASCOL (+9.7%WoW), iii) COLG (+9.6%WoW), iv) NCL (+7.9%WoW), and v) PTC (+7.6%WoW), while top laggards were, i) STJT (down 13.9%WoW), ii) GATI (down 9.2%WoW), iii) PAKT (down 6.6%WoW), iv) SFL (down 6.1%WoW), and v) AGIL (down 5.0%WoW). .

Courtesy – AKD Research