Stock market at a glance.

Market Review

The benchmark index started off on a negative note, however, managed to close in green in the outgoing week, exhibiting an increase of 5.5%WoW to 40,556pts, as investors reacted positively to USD6.0bn support package from Saudi Arabia. During the week, market participation improved as evident from ADT and ADTV which increased by 51.1%WoW and 53.6%WoW, respectively. However, foreign investors continued to remain net seller, exhibiting an outflow of USD17.2mn.

During the week, ECC approved a 33% hike in power tariff (PKR1.27/unit) to recover additional PKR144bn from consumers. Furthermore, a Saudi consortium is proposing to establish five desalination projects in Pakistan with an investment of USD2.0bn. Pakistan is planning to build a grain terminal with an investment of USD200mn, which help take pressure off the existing grain terminal at Port Qasim. Pakistan Sugar Mills Association (PSMA) expressed disappointment regarding the stringent conditions placed by the government over the export of 1.0mn tons of sugar, especially over the decision to commence crushing season earlier than previous years.

On the macro front, SBP foreign exchange reserves declined to USD7.8bn, a decline of USD264mn, owing to external debt servicing and official payments. During 1QFY19 the country's current account deficit narrowed 2.6% to USD3.67bn as robust growth in remittances covered the trade deficit to some extent with foreign exchange reserves having fallen to cover less than two months of imports. Furthermore, despite receiving USD6.0bn package from Saudi Arabia, it is expected that the country will still approach IMF for a bailout package.

Outlook

We believe that the ability of the government to fund external account would shape the market sentiment. Moreover, the ongoing result season would also play its role in dictating the direction of individual stocks.

News This Week

Economic highlights and Data points

Foreign exchange: SBP's reserves fall USD264mn, stand at USD7.8bn (Tribune): The foreign exchange reserves held by the central bank continued to spiral downwards for the ninth successive week as they fell 3.26% on a weekly basis, according to data released on Thursday.

Country still needs IMF bailout package (The Nation): Pakistan would still approach International Monetary Fund (IMF) for bailout package despite the fact that it has received package from Saudi Arabia.

PM secures USD6.0bn support from KSA (The Nation): Pakistan Tuesday took a...