Extending rally for the fourth consecutive week, the benchmark index closed the week ended on November 06, 2021 at 47,296 points, up 2.33%WoW. It was the highest weekly gain since May 2021 as investors turned optimistic on a possible breakthrough in much awaited IMF review and the incumbent government possibly regaining political capital through Rs120 billion subsidies on key food commodities. Trading volumes also improved with daily average turnover rising to 429.7 million shares during the week as compared to 219.1 million shares a week ago, it was the highest in last 8 weeks.
Other major news flows during the week were: 1) FBR collecting Rs1.8 trillion during July-October period of 2021, exceeding the target by Rs232 billion with October 2021 tax collection reported at Rs439 billion, up 33%YoY, 2) inflation rising to 9.2%YoY in October on hike in energy and food prices, 3) trade deficit narrowing 9.75%MoM to US$3.8 billion indicating that the measures announced by authorities to curb non-essential imports are yielding results and would foster external account stability, 4) OMC sales up 22% in 4MFY22 to 7.85 million tons, 5) textile exports reaching an all-time high of US$6.0 billion in first four months of current financial year and 6) yield on 3-month Government paper increasing by 25bps leading to 127bps hike since last monetary policy showcasing market expectation of interest rate trajectory going forward.
Sector-wise, within mainboard, Techs regained momentum and were up 10.4%WoW followed by Engineering and Cements returning 5.5%WoW and 5.1%WoW respectively, whereas overall, Jute and Refinery sectors emerged as leaders with gains of 19.8%WoW and 14.6%WoW, respectively.
Flow-wise, foreigners emerged net sellers, drawing out US$11.2 million, along with Mutual Funds (net sell US$6.3 million) which was mainly absorbed by Individuals (US$14.4 million) and Insurance Companies (US$6.5 million).
Stock wise, major performers were: SFL, HASCOL, SRVI, SYS, ANL, while laggards were: STJT, FML, GATI, PMPK and THALL.
Market sentiments are likely to be driven by news flows relating to IMF review in the near term. Other key factors influencing market performance going forward are: 1) Pakistan set to be reclassified into MSCI FM from MSCI EM where changes are to take effect by November-end, and 2) monetary policy which is due to be announced also towards the end of the month. We continue to advocate from thematic plays which include Banks (on monetary tightening), Construction-driven sectors (Cements, Steel), and Textiles (on devaluations and strong export prospects).