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.
