Pakistan Stock Exchange benchmark index up 3.7%WoW

Momentum gained in the earlier week continued into the week ended on April 01, 2022. The benchmark index gained 3.7% WoW, the strongest weekly return since April 2022 to close at 45,152 points. Participation also improved during the week, with average daily trading volume rising to a little above 310 million shares – the highest in 11 weeks, with side scrips garnering investor attention.

Major news flows during the week were: 1) No-trust resolution against PM Imran Khan tabled in the National Assembly, 2) Punjab Chief Minister tendered his resignation to make space for a new Chief Minister possibly from PML-Q, PTI’s ally in the Centre and Punjab, 3) China rolled over US$2 billion SAFE deposits, however, payment of China’s loan syndicated facility resulted in an outflow of US$2.9 billion – resultantly FX reserves declined to US$12.0 billion, 4) IMF still in talks with Pakistan counterparts over 7th review, 5) Moody’s sees no-trust move against PM as credit negative, 6) NSS rates jumped up to 100bps across different instruments, 7) FBR registered 29% growth during July-March 2022 revenue collection despite massive tax relief, 8) PSO’s circular debt rose to an alarming level to PKR658 billion, 9) GoP pushed cash-strapped refiners to bump up output, and 10) Foreign investors pulled out US$397 million from capital markets in March 2022.

Foreigners sold US$15.5 million with the most being in Banks (US$13.7 million), along with Mutual Funds (US$5.2 million) which was absorbed by Banks (US$15.7 million) and Individuals (US$7.5 million).

Top performing stocks for the week included: ANL, IGIHL, DGKC, NRL and PIOC, while laggards were: COLG, SRVI, ATLH, ABL and EFERT.

Market is likely to be driven by political developments in the near term. However, ease-off in global commodities would provide episodes of gains. Ramadan season might keep market activity dry, but commencement of result season could bring investor interest in specific stocks. Analysts continue to advise investors for building long-term positions, limiting short-term trading.

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