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.
