The outgoing week saw the market awaiting the MPC meeting’s decision, wherein expectations ranged from ~0% to 2% hike in the policy rate, and last week’s T-Bill auction suggested the latter. However, the Finance Ministry left the policy rate unchanged at 22%, citing controlled inflation and lower CAD, amongst others, as the main impetus to maintaining the status quo. On a negative front, FX reserves saw a 9%YoY decline on the back of external repayments, although staying flattened WoW. Furthermore, remittances declined by ~22%YoY for the first 2 months of FY24, posing threats to an already cash-strapped economy.
PkR maintained its upward trajectory against the US owing to controls imposed on open market buying and selling to adhere to IMF requirements. PkR closed at 296.85/US$ (↑2.05%WoW). Overall, the trading session during the week remained within a narrow range, with investors focused on economic and political stability. The benchmark index opened the week at 46,013pts, settling at 45,754pts (↓260pts, 0.57%WoW). Average traded volumes were ~141mn vs. ~138mn shares last week, up by ~2%WoW.
Other news for the week were: 1) NEPRA grilled CEOs of DISCOs over inflated electricity bills; 2) Bank deposits hit PkR26.1tn, up 18%YoY; 3) Electricity consumers hit by ~PkR8 – PkR15/unit hike in Aug’23; 4) Debt servicing looks to hit record PkR8tn owing to high-interest rates; 5) Foreign banks seek 10% commission to endorse LCs; 6) Jul-Aug FDI up by 16%YoY to US$234mn; 7) Petrol price likely to go up by PkR16/litre.
Buying was witnessed sector-wise in Leasing companies, emerging as the top performer, recording gains of 3.8%WoW, whilst Close-end mutual funds saw major selling declining by 10.31%WoW. Flow-wise, major selling was recorded by Banks/DFI with a net sell of US$5.7mn. On the other hand, Insurance companies absorbed the selling with a net buy of US$7.9mn. Company-wise, top performers during the week were, i) PSEL (10.6%WoW), ii) SEARL (7.9%WoW), iii) PIOC (6.8%WoW), iv) DAWH (6.4%WoW), and v) MUGHAL (6.1%WoW), while top laggards were, i) HGFA (10.3%WoW), ii) MUREB (9.8%WoW), iii) UPFL (6.9%WoW), iv) THALL (6.8%WoW), and v) PKGS (6.6%WoW). Company-wise total volume leaders were 1) BAFL at 66.11mn shares; 2) MLCF at 40.35mn shares; 3) KEL at 39.64mn shares; 4) WTL at 31.96mn shares; 5) MCB at 30.56mn shares.
The market is expected to remain range-bound as investors continue to look towards the next IMF review and announcement of the general elections schedule. We advise investors to remain cautious while taking positions and invest in companies with strong fundamentals or high dividend-yielding scrips.
Courtesy – AKD Research