Market remained flat throughout the week ended on December 24, 2021 posting a nominal increase of 0.5%WoW to close in at 44,118 points level. This took the cumulative performance throughout CY21 to 0.8% whereas USD adjusted return currently stands at negative 9%. Volumes dried up significantly on WoW bases and average daily traded volume was recorded at 215 million shares as opposed to 265 million shares, down 18.7%WoW. Top performers of the market included: BNWM, HCAR, TRG, PSX and ABOT. The laggards were: ARPL, SFL, GATI, COLG, and JDWS.
The performance during the week was driven by the news flow related to possible resumption of the IMF program, the pre-conditions related to the program and the law making the country needs to do in order to unlock the flows.
Major news released during the week included: 1) CAD numbers for November 2021 settled around US$1.9 billion as opposed to expectations of US$2.5 billion, 2) GoP approved textiles and auto policies, 3) GoP missed petroleum levy target by 41 percent, 4) ADB approved US$1.5 billion loan for the power sector reforms and 5) GoP increased the base tariff by 95paisas. Other key market related news during the week were: 1) Wilmar increased its stake in Unity to 15.1 percent, 2) cellular subscribers increased to 106.68 million as per PTA’s latest report, 3) fertilizer shortage in Sindh and Punjab to hit wheat production in the country, 4) GVGL looking to enter auto assembling business and 5) Auto financing touched PKR350 billion mark.
In terms of the top performing sectors, Power generation (news of payment of outstanding dues) was the top performer, returning 4%WoW, followed by Pharmaceutical sector (news of revision in drug prices) returning 3.7%WoW and Textile spinners (soaring yarn margins) returning 3%WoW.
Flow wise, Foreigners emerged net buyers with an inflow of US$3.7 million, absorbing sell-off by Mutual funds (US$3.6 million) and Individuals (US$2.6 million).
The market performance is likely to remain range-bound next week given the year end phenomena where the volumes appear to ease-off slightly before New Year. The market is also likely to closely watch the developments related to announcement of mini-budget. The market will keep close eye on the secondary market yield movements where the central bank through its recent open market operations flushed banking industry liquidity which helped bring down the yields on GoP papers by up to 80bps.