Stock Review.

Byline: Shabbir Kazmi

Upcoming monetary policy may define direction

During the first week of the New Year, ended on January 07, 2022, the benchmark index of Pakistan Stock Exchange (PSX) closed at 45,346 points. Average daily trading volume rose to 318 million shares, from 218 million shares a week ago. Major gainers were: STJT, HUBC, ISL, GATI and UNITY, while top laggards included: TRG, HMM, MUREB, PMPK and KTML. Tabling of Finance Amendment Bill and State Bank of Pakistan Amendment Bill during the latter part of the week indeed provided confidence to investors on the eventual resumption of IMF program.

Other important news flows of the week were: 1) FBR revenue collection jumping 18%MoM to PKR600 billion in December 2021 taking 1HFY22 revenue collection to PKR2.92 trillion, up 32.5%YoY, 2) inflation rate rising to 12.3%YoY during last month of previous calendar year, 3) furnace oil offtake from refineries improving with IPPs placing orders of 250,000 tons for January 2022 alone, 4) cement dispatches declining to 4.6 million tons in December 2021 as compared to 4.8 million tons during the same period a year ago, 5) trade numbers suggesting 106.4%YoY increase in trade deficit during 1HFY22 and 6) Power division releasing another 40% amount to 12 IPPs under the MoU signed in CY21.

Within major sectors, Power segment recorded a gain of 3.0%WoW, followed by Fertilizers up 2.8%WoW, while Textile composite was down 1.5%WoW. Overall, Textile Weaving segment registered strongest increase of 10.1%WoW, followed by Transport (up 6.8%WoW), whereas Woollen segment stood as the laggard, down 3.5%WoW.

Foreigners emerged net buyers at US$24.1 million, excluding gross buy of US$26.0 million which is likely to include strategic buying by TRG of its shares, the group stands as a net seller of US$1.9 million. On the local side, Individuals stood on the selling side with a net sell of US$15.1 million followed by Mutual Funds with a net sell of US$8.4 million - which is likely to include contra position of TRG transaction - whereas banks turned out to be on the other side of the spectrum with a net buy of US$7.0 million.

Key events to watch in the upcoming week are: 1) National Assembly session being called to consider Finance Amendment Bill 2021, and 2) IMF Board meeting on January 12, 2022, which is likely be delayed on possible request by Pakistani counterparts subject to completion of prior actions as already hinted by the authorities). In the near term...