The market witnessed lacklustre performance this week, with a weekly change of 59 points. The reason behind this dull performance was economic and political instability that remained throughout the week. IMF situation continued to hang in the balance, despite the government officials’ doubtful assurances of resolution. Currently, IMF is seeking commitments from friendly countries to bridge the gap in external financing, and the fund is demanding clarity on the announced fuel subsidies. Alongside these developments, reserves saw a decrease of US$354mn in SBP-held reserves, standing at US$4.24bn as of 24th March.

KSE100 index gained 59pts this week and closed at 40,000pts on Friday, a positive change of 0.15%WoW. Market participation also fell by 30.8%WoW and the average volume was reported at 92.3mn, which was 133.4mn last week. Other major news flows during the week included; 1) July 1-March 11: Rs2.6trn borrowed for budgetary support, 2) Jul-Feb repatriation of profit, dividend plunge 80pc YoY; Import curbs hurt investors in equal measure, 3) IT exports down 3%YoY to $195 million in February, 4) FBR Faces Uphill Task to Meet Tax Collection Target for July-March, 5) UAE says its keen to invest in Pakistan economy. Sector-wise, Leather & Tanneries, Textile weaving, and Cable & Electrical goods were amongst the top performers, up 7.5%/4.2%/2.7%WoW respectively. On the other hand, Miscellaneous, Leasing companies and Property were amongst the worst performers with a decline of 11.7%/5.2%/2.5%WoW.

Flow-wise, major net selling was recorded by Insurance with a net sell of US$8.64mn. On the other hand, Banks absorbed most of the selling with a net buy of US$4.58mn, followed by Companies with net buy of US$4.46mn. Company-wise, top performers during the week were, i) CEPB (up 9.1%WoW), ii) SHFA (up 8.3%WoW), iii) PIBTL (up 7.9%WoW), iv) HCAR (up 6.7%WoW), and v) PAEL (up 6.5%WoW), while top laggards were, i) PSEL (down 23.6%WoW), ii) PGLC (down 14.4%WoW), iii) YOUW (down 9.0%WoW), iv) SHEL (down 5.6%WoW), and v) KTML (down 5.0%WoW).

Outlook

The main focus of the market will be on the MPC meeting on April 4th where we are expecting a rise of 200bps. In addition, the market will also be focusing on any positive developments on the SLA from IMF, which could create a rally in the market. However, until there are clear economic and political developments, we anticipate the market to remain in a range-bound state. As such, we advise investors to take positions in the market with caution and to keep their ear to the ground for any significant changes on the horizon.

Courtesy – AKD Research