KARACHI: The stock market to wait for the IMF package during the next week, which is current stalled.
Analysts at Arif Habib Limited said that despite noise gaining traction on the economic front, we believe there is some silver lining; 1QFY22 fiscal deficit declined by 9.2 per cent YoY whereas local production also appears under control (auto sales went up by 49 per cent YoY and Fertilizer – Urea – offtake went up by 23 per cent YoY in October 2021).
Therefore, we believe that market sentiment is hinged upon announcement of the IMF package, which is currently being stalled by two departments of the IMF. Once through, the market is likely to post a rebound.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.9x (2022) compared to Asia Pac regional average of 14.9x while offering a dividend yield of 8.4 per cent versus 2.2 per cent offered by the region.
Stocks this week showed weakness as market participants appear frantic amid delay in a positive outcome from the IMF regarding resumption of the USD 6bn EFF for Pakistan.
As a result, economic outlook appears dubious. The Pak Rupee came under immense pressure once again (down to 175.73/USD against PKR 170.01/USD last week) as future disbursement of foreign flows remains uncertain prior to IMF tranche release, while high CPI reading will implicate the government’s fiscal estimates (subsidies on staple foods etc. to control rising inflation).
Therefore, the KSE-100 index closed at 45,749 points (down by1,547 3.3 per cent WoW).
Sector-wise negative contributions came from i) Banks (277 points), ii) Cement (255 points), iii) Technology (226 points), iv) E&P (140 points), and v) Engineering (90 points). Whereas, sectors which contributed positively were i) Fertilizer (37 points), and ii) Glass & ceramics (3 points). Scrip-wise negative contributors were TRG (140 points), PPL (73 points), OGDC (70 points), LUCK (65 points) and UBL (65 points). Meanwhile, scrip-wise positive contribution came from FFC (48 points), EFERT (17 points) and ABL (9 points).
Foreign selling continued this week, clocking-in at USD 5.3 million compared to a net sell of USD 11.2 million last week. Major selling was witnessed in Commercial Banks (USD 7.6 million) and Cement (USD 3.0 million). On the local front, buying was reported by Companies (USD 6.5 million) followed by Insurance Companies (USD 5.7 million). Average volumes clocked-in at 316 million shares (down by 26 per cent WoW) while average value traded settled at USD 63 million (down by 29 per cent WoW).
