PSX benchmark index up 5%WoW

Pakistan Stock Exchange (PSX), despite experiencing volatility recorded a hefty increase of 5,248 points in benchmark index. Market closed at another high of 114,302 points, marking an increase of 5%WoW on Friday, December 13, 2024.

With the CPI remaining below the 5% threshold and T-Bills yields in the recent auction dropping to 12% for the 3-months and 6-months paper, down 100bps and 89bps respectively, investors’ optimism has been bolstered, fueling expectations for continued monetary easing in the upcoming (MPC) meeting scheduled for December 16, 2024.

The news about potential imposition of additional tax on banks put the sector under pressure.

Automotive industry sales for November 2024 were reported at 13,856 units, up 37%YoY.

Workers’ remittances grew to US$2.9 billion, up 29.1%YoY.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by US$13 million to US$12.0 billion as of December 06, 2024.

Average daily trading volume declined by 19.0%WoW to 1.4 billion shares, from 1.7 billion shares traded in the earlier week.

PKR remained stable against the greenback, closing the week at PKR278.12 to a US$.

Other major news flow during the week included: 1) assets under management mutual funds exceeded PKR3 trillion mark, 2) Petroleum Division will soon start issuing notices to CPPs for disconnecting gas supply, 3) Punjab government to give free solar panels to 100,000 households, 4) National Savings reduces profit rates by up to 250bps and 5) PAF announced to buy PIA engineering unit for PKR6.5 billion.

Oil & Gas Exploration companies, Mutual Funds, Oil & Gas Marketing Companies, Refinery and Miscellaneous were amongst the top performers, while Commercial Banks, Modarabas, Textile Spinning, Synthetic & Rayon and Automobile Parts & Accessories were amongst the laggards.

Major selling was recorded by Brokers with a net sell of US$3.3 million, while Mutual Funds absorbed most of the selling with a net buy of US$8.6 million.

Top performing scrips of the week were: MARI, SHEL, ATRL, NML, and PSO, while laggards included: ABL, BAFL, MEBL, BAHL and BOP.

Continuation of monetary easing due to disinflationary environment and improving macroeconomic environment would make investment in equities more appealing, currently trading at P/E of 5.7x and DY of 8.7%.

Aforementioned factors, along with declining external financing requirement under the IMF program, would keep foreigners’ interest alive.

AKD Securities recommends sectors that benefit from monetary easing and structural reforms. However, modest economic recovery may limit the upside for cyclicals.

Top picks of the brokerage house include, OGDC, PPL, MCB, HBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

PSX Index closes the week at the historic high

Pakistan Stock Exchange (PSX) remained volatile throughout the week ended on November 29, 2024. This led to the KSE-100 index registering its highest ever intra-day gains of 4,695 points on Wednesday, and closing at a record high of 101,357 points on Friday, marking an increase of 3.6%WoW.

The volatility stemmed from acceleration in political instability amid opposition party reaching to protest in the country’s Capital, creating uncertainty amongst the investor, leading to a major fall in benchmark index, marking a decrease of 3,506 points on Tuesday. However, market regained its momentum on Wednesday after the protestors started to back off from Islamabad and the momentum was further fueled by a circular from the State Bank of Pakistan (SBP), removing the MDR requirements on deposits held by Commercial banks of financial institutions and public sector enterprises. This led to the KSE-100 index registering its highest ever intra-day gains of 4,695 points on Wednesday, and closing at a record high of 101,357 points on Friday, marking an increase of 3.6%WoW.

Major contributing sectors to this rally were commercial banks, contributing 1,675 points, followed by Technology & Communication with 349 points, and Oil & Gas Exploration, which added 283 points during the week. However, with another circular from the SBP revising its guidelines for profit sharing on saving deposits for Islamic Banking Institutions (IBIs), which resulted in MEBL eroding 439 points during the week.

Secondary market yields on the 6-month bill decreased to 12.12%, dropping to the lowest levels seen in over 2.5 years.

Foreign exchange reserves held by SBP increased by US$131 million WoW, ending the week at US$11.4 billion as of November 22, 2024.

Average daily trading volume remained higher, up by 39.8%WoW, rising to 1.4 billion shares, as compared to 990.7 million shares traded a week ago.

PKR witnessed a meagre depreciation of 0.1% against the greenback during the week to close at 278.05PKR/US$.

Other major news flow during the week included, 1) SBP receives US$500 million from ADB under climate resilience program, 2) IT Ministry released incentive plan for semiconductor industry, 3) Pakistan, Belarus announced to boost ties with 8 MoUs, and 4) the GoP formed a body to oversee Reko Diq deal.

Property, Leather & Tanneries, Oil & Gas Marketing Companies, Technology & Communication and Exchange Traded Funds were amongst the top performing sectors, while Jute, Woollen, Transport, Automobile Assembler & INV.Banks/ INV.Cos/ Securities Cos. were amongst the worst performers.

Major selling was recorded by Foreigners with a net sell of US$15.1 million. Insurance Companies absorbed most of the selling with a net buy of US$10.6 million.

Top performing scrips of the week were: BOP, AKBL, HBL, JVDC, and MEHT, while laggards included: MEBL, FABL, PSEL, SAZEW, and GHGL.

Continuation of monetary easing due to disinflationary environment and improving macroeconomic environment would make investment in equities more appealing, currently trading at P/E of 4.9x and DY of 10.2%.

Aforementioned factors, along with declining external financing requirement under the IMF program, would keep foreigners’ interest alive.

AKD Securities recommends sectors that benefit from monetary easing and structural reforms. However, modest economic recovery may limit the upside for cyclicals.

The top picks of the brokerage house include, OGDC, PPL, MCB, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

 

PSX witnesses 16.5%WoW decline in average daily trading volume

Pakistan Stock Exchange (PSX) remained volatile during the week, with the benchmark index losing 233 points or 0.3WoW to close at 85,250 points on Friday, October 18, 2024.

Commercial Banks and Power sectors were the primary drags on the index, as concerns over additional ADR-based taxation to weigh on banks’ expected profitability for the last quarter, while continued government scrutiny on IPPs added pressure to the Power sector.

Fertilizer sector also remained laggard due to lower than expected payouts by EFERT.

On the political front, the successful conclusion of the SCO summit was a positive development. However, heightened political noise towards the weekend kept market sentiments subdued.

Textiles and food exports remained elevated.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) crossed the US$11 billion mark for the first time in last two and half years, as of October 11, 2024.

In the T-Bills auction held on Wednesday, GoP raised PKR716 billion as against a target of PKR400 billion, with 3 and 6 month yields falling to 15.3% and 14.3%, respectively.

In its recent fortnightly review, GoP hiked diesel prices by PKR5/litre, while keeping petrol prices unchanged.

Market participation plunged by 16.5%WoW, with average daily traded volume dropping to 432 million shares from 518 million shares in the earlier week.

On the currency front, the PKR remained largely stable against the greenback, closing the week at PKR277.6 to a greenback.

Other major news flows during the week included: 1) GoP pays off PKR1.2 trillion domestic debt in first quarter of the current financial year, 2) Roshan Digital Accounts surpass US$8.749 billion in remittances, 3) LSM output rises by 4.68MoM in August, and 4) Urea off takes decline by 35YoY in September.

Tobacco, Close-end Mutual Funds, and Engineering were amongst the top performing sectors. Woollen, Property, and Transport were amongst the worst performers.

Major selling was led by Banks, with a total outflow of US$16.6 million, primarily due to NBP offloading its entire stake in AGL to FFC. Foreigner followed with net sell of US$11.1 million.

Companies absorbed most of the selling with a net buy of US$25.8 million.

Top performing scrips of the week were: ATRL, PAKT, HGFA, FCEPL, and JDWS, while laggards included: NPL, JVDC, BNWM, KAPCO, and PIOC.

Market is expected to remain positive going forward, supported by declining interest rates, anticipated to continue channeling investment flows into equities.

Additionally, with the ongoing earnings season, corporate results would stay in focus.

Despite the recent upward trend, the market remains attractively valued, currently trading at a P/E of 3.7x with a dividend yield of 11.9%.

AKD Securities proposes focusing on sectors that are likely to benefit from monetary easing and structural reforms, particularly high dividend yield stocks, likely to re-rate as yields converge with fixed income returns. Top picks include, OGDC, PPL, MCB, UBL, MEBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

PSO posts 57 percent increase in profit after tax

On Tuesday, Pakistan’s largest oil marketing company, Pakistan State Oil Company Limited (PSO) released its half yearly results and also announce approval of 50 percent dividend by the Board of Directors. The results were above market expectations.

PSO has posted profit after tax of Rs6.7 billion (EPS: Rs24.76) for the half year ended 31^st December 2015 as compared to profit of Rs4.2 billion (EPS: Rs15.76) for the corresponding period of 2014, an increase of 57 percent.

The major takeaways are: 1) reduction in financial cost to Rs3.6 billion from Rs5.9 billion, may be because of improved cash flow and declining interest rates, 2) increase in share of profit of associates rising to Rs388 million from Rs23 million and 3) other income also went down to Rs5.3 billion from Rs6.7 billion.

Net sales of the company declined by over 30 percent to Rs353.9 billion from Rs508.2 billion. This erosion can be attributed to the declining trend in international prices of crude oil, also affecting prices of POL products being dispensed by PSO.