The market trajectory next week will be determined by the MPC decision, scheduled to meet on 23 Jan, wherein the market is largely expecting a 100bps increase in policy rates. The market has already priced in the 100bps hike, and any deviation in the decision could impact the market. In addition, the external position of the country would remain in focus, with the resumption of the IMF programme detrimental to the sentiment in the market. The IMF’s stamp of approval would unlock flows from bilateral and multilateral sources—the need of the hour considering the alarming reserves position of the country.

However, the government would have to take difficult decisions to get the IMF onboard, including additional revenue collection of PkR200bn, gas and electricity tariff hikes, and a market-determined exchange rate.

We continue to advocate companies that have dollar-denominated revenue streams as the weakness in the currency is expected to remain, which includes the Technology and E&P sectors.

Courtesy- AKD Research