In a week
mired with political uncertainty, the movement at Pakistan Stock Exchange
remained jittery. Furthermore, the IMF has set forth another condition
regarding written assurances from friendly countries to fund balance of payment
gap before the Staff Level Agreement (SLA). The ICBC has given assurance that
it will provide another refinanced US$500 million loan in few days bringing
total commercial loans refinanced up to US$1.7 billion.
Pakistan’s
foreign exchange reserves inched by US$18 million to US$4.3 billion as on March
10, 2023, culminating to an import cover of less than a month.
The
benchmark index closed the week at 41,330 points, down 1.11%WoW. Participation in
the market increased, with daily volumes averaging 223.02 million shares during
the week, from 209.24 million shares in the prior week depicting a gain of
6.6%WoW.
Other major
news flows during the week included: 1) Saudi Arabia extended US$1.2 billion deferred
oil payment facility till February next year, 2) GoP raised PKR26 billion
through PIBs auction, 3) July-January LSM output declined 4.40%YoY, 4) Bank
deposits were up 15%YoY to Rs22.9 trillion in February, 5) workers’ remittances
for February post 5%MoM growth and 6) GoP announced plan to borrow PKR7
trillion from banks in three months.
Top
performing sectors were: Woolen, Glass and Ceramics, and Sugar & Allied
industries, while the least favorite sectors included: Miscellaneous, Close-
End Mutual Fund, and Synthetic and Rayon.
Stock-wise,
top performers were: YOUW, TGL, CEPB, DGKC, and BNWM, while laggards included:
PSEL, NESTLE, FHAM, BAHL, and RMPL.
Flow wise,
individuals were the major buyers with net buy of US$4.23 million, followed by
Banks/DFI with net buy of US$1.06 million), while Insurance companies were
major sellers during the week, with a net sell of US$2.08 million.
Any further
development on the IMF front is likely to set the direction of the market. The
recorded high inflation of 31.5%YoY in February 2023 is expected to remain a
thorn in the country’s side, driven by hikes in tariffs along with Rupee
devaluation. This may lead the market to another hike in upcoming Monetary
Policy accouchement scheduled for April 04, 2023.
Moreover, the
local currency has continued to slide against the US dollar with no certainty
regarding its limit. With this backdrop, analysts continue to advocate scrips
that have dollar-denominated revenue streams to hedge against the currency
risk, which include the Technology and E&P sectors.
