Market participation remained healthy with daily traded volume averaging at 352 million shares as compared to an average of 265 million shares during the earlier week up 33%WoW.
The market performance was characterized by the IMF’s executive board’s approval of the SBA (Stand-By Arrangement) and the inflow of US$1.2 billion. Additional support was provided by influx of US$2.0 billion from Saudi Arabia and US$1.0 billion from United Arab Emirates. The inflows would reflect in the next week's reserve numbers held by State Bank of Pakistan (SBP) which are anticipated to cross US$8 billion mark after 9 months. As of July 07, SBP held reserves were reported at US$4.5 billion. As a result PKR gained 0.11%WoW to close at PKR277.6/ US$ parity.
Other major news flows during the week included: 1) steps taken to broaden tax base, 2) July-May LSMI output declined 9.87%YoY, 3) FY23 remittances fall 13.6%YoY to US$27 billion, 4) car sales plunged 82% in June and 59% in the last financial year, 5) GoP announced to mobilize additional PKR3.2 trillion from power consumers and 6) during Jan-May period 4.88 million mobile phones manufactured in country.
Chemical, Automobile Parts & Accessories, and Leather & Tanneries emerged the top performers. Close-End Mutual Fund, Technology & Communication, and Textile Spinning were amongst the worst performers.
Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$5.97 million. Individual absorbed most of the selling with a net buy of US$3.93mn.
Top performing scrips were: during the week were: UNITY, HCAR, COLG, PSMC, and AIRLINK, while laggards included: GADT, UPFL, SHEL, PGLC, and TRG.
Stock market is expected to remain positive, owing to growing foreign exchange reserves and consequent improvements in the PKR/ US$ parity.
At present market offers attractive valuation. However, upcoming results may exert pressure on bullish sentiment due to the retrospective imposition of the super tax.
Investors are advised to follow a cautious approach in the selection of scrips and focus on stocks with dollar-denominated revenue streams (Tech and E&Ps) and companies with healthy dividend-yields.