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Karachi, July 07, 2023 (PPI-OT): Weekly Review
This week started on a very positive note, with the market shooting ~2000pts up from the opening bell, closing at 43,899pts by day end. This was majorly driven by the positive sentiment coming out from the Eid Holidays as the country’s authorities reached SLA with the IMF on June 30th (Friday). Overall, market ended gaining 2,754pts (6.65%WoW) during the week, breaking the 44,000 barrier during Thursday’s trading session (+660pts intraday). The market capitalization this week is PkR 6,685bn increasing from PkR6,361bn. In terms of volume, WTL topped the table with 162.97mn and CNERGY was a runner up with 103.65mn. FX Reserves held by SBP increased from US$4.07bn on June 23rd to US$4.5bn on June 30th, reflecting an increase of 10% WoW. Thus, total liquid FX reserves on June 30th stand at US$9.7bn, representing an increase of 4% WoW.
Moreover, CPI for June’23 clocked to 29.40%YoY. Other notable news for the week include; 1) The price of petrol would remain unchanged at Rs. 262 per litre whereas the price of High Speed Diesel was raised by Rs. 7.5 to Rs. 260.5 (effective from 1st July); 2) Pakistan’s trade deficit for June’23 added up to US$1.81bn compared to US$2.13bn for the last month; 3) The government has increased advance income tax rate for commercial importers from 5.5% to 6%; 4) IMF puts Pakistan’s external funds requirement at $91.5bn over three years; 5) The federal government’s total debt stock skyrocketed to PkR 58.96tn in May 2023 given increased domestic and external borrowing; 6) The State Bank of Pakistan’s forex reserves further increased by $ 393 million to $4.463 billion; 7) Saudia Arabia invested $0.59bn under SIFC; 8) Pak Eurobond yields witnessed a significant increase on a MoM basis. Sector wise, Modarabas/Leasing Companies/Synthetic and Rayon have been worst performers, declining by 6.4%/6.1%/6.0% on a weekly basis, whilst Refinery remained an anomaly clocking a 17.1% gain.
Company-wise, top performers during the week were, i) NRL ((Up) 28.8%WoW), ii) AIRLINK ((Up) 23.1%WoW), iii) AVN ((Up) 22.4% WoW), iv) UNITY ((Up) 22.3% WoW), and v) INIL ((Up) 19.8%WoW), while top laggards were, i) PGLC ((Down) 12.4%WoW), ii) IBFL ((Down) 9.1%WoW), iii) GADT ((Down) 7.3%WoW), iv) EFUG ((Down) 7% WoW), and v) PAKT ((Down) 4.2% WoW). Flow-wise, major net selling was recorded by Banks/DFIs with a net sell of US$5.48mn. On the other hand, Insurance Companies absorbed most of the selling with a net buy of US$5.72mn.
Outlook
After a positively bullish end to the previous week, market participants are anticipated to await further clarity regarding the IMF situation. The market may observe momentum once the lender concludes its board meeting on July 12th. It is believed that the country’s impending risk of defaults needs to diminish before the market can establish its direction. For this reason, we reiterate our stance of following a cautious approach to stock picking and continue to advocate dollar-denominated revenue stream scrips (Tech and E and P sector) to hedge against currency risk or high dividend-yielding scrips.
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