Market started off the week on a good note with KSE-100 index rising 1.2% in first trading session of the week where banks led the rally as investors factored in prospects of improvement in profitability on the back due to the hike in interest rate. The banking sector remained among top performers during the week, rising 2.5% on the back of aforementioned reason. However, in the later sessions, profit taking was witnessed as market hovered around the 46,000 level, while some jitteriness was also witnessed on the back of rising international oil prices and Pakistan requesting IMF to shift board meeting for approval towards tail end of January 2022. Over all, KSE-100 closed the week ended on January 14, 2022 at 45,763 points, up 0.92%WoW. The average daily turnover rose to 356 million shares, from 318 million shares posted a week ago.
Other important news flows during the week included: 1) Economic Coordination Committee (ECC) of the Cabinet allowing the import of 50,000 tons urea from China on government-to-government (G2G) basis, 2) Country’s circular debt reaching PKR2.4 trillion mark during first five months of current financial year, 3) Sale of passenger cars witnessing an upsurge of 59.4%MoM during December 2021, rising to 24,462 units as opposed to 15,351 units sold in November 2021 and 4) National Assembly passing the Finance (Supplementary) Bill, 2021 and the State Bank of Pakistan (Amendment) Bill, 2021. Within major sectors, Textile Composite recorded a gain of 4.4%WoW, followed by Chemical (4.2%WoW), while Cement was down 0.9%WoW.
Flow-wise, foreigners’ net buy was recorded at US$0.53 million, while Mutual Funds were the net sellers with a net sell of US$9.95 million followed by Companies with a net sell of US$2.46 million, whereas banks turned out to be on the other side of the spectrum with a net buy of US$6.84 million.
Stock wise, major gainers included: FABL, HASCOL, COLG, NCL and PTC, while top laggards were: STJT, GATI, PAKT, SFL and AGIL.
Market is expected to look forward towards IMF Board’s approval for resumption of program particularly after mini budget has been passed by the parliament which was a major prerequisite for resumption. In the near term, the upcoming Monetary Policy announcement on January 24, 2022 could determine market direction along with IMF. The central bank has already expressed to pause interest rate cycle but any further tightening given already higher trade deficit for December 2021 and uptick in commodity prices could result in distressed stock performance in the short run. Analysts continue to advocate gradual accumulation on weakness, whereas preferred sectors include, Banks, Cements, Fertilizers, Consumer plays and select Techs.