Stock Review- Negative sentiments prevail; value stocks may shine.

During the week ended on February 25, 2022, negative sentiments engulfed the market following the escalation in Russia -Ukraine conflict where President Putin gave green signal to invade Ukraine. Following this news, the benchmark KSE-100 index slipped 3% alone on Thursday, plunging the index down to 43,984 points by the end of week. During the week, Brent Oil flirted with US$100/bbl level, while other global commodities such as Natural Gas/Wheat/Coal rallied 24/16/4% on supply concerns. The average daily trading volume increased 20%WoW to 228.5 million shares as investors made their way to dispose off their holdings.

Other major news flows during the week were: 1) Prime Minister Imran Khan meeting with President Putin, 2) CAD rising to US$2.56 billion, out of which US$1.56 billion were financed, 3) T-Bill yields rising to 23bps, 4) IFTC approving US$1.2 billion financing facility for Pakistan, 5) Pakistan meeting all FATF requirements, 6) GoP establishing Tech startup fund in Pakistan, and 7) January 2022 fertilizer offtakes remaining flat MoM basis.

The top performing sectors included: Leasing Companies, Close-end Mutual Funds, REIT, Tobacco and Jute, while the least favorite sectors during the week were: Refinery, Textile Weaving, Technology and Communication, Engineering, and Woollen.

Stock wise, top performers were: NCL, HMB, MTL, PAKT and UBL, while laggards were: TRG, ANL, YOUW, ATRL and JSCL. Volume leaders for the week were: WTL, TELE, HUMNL, BOP and KEL.

Flow-wise, Mutual funds emerged the net sellers, offloading US$15.2 million followed by foreigners (US$3.2 million) and other organizations (US$1.2 million), while Companies (US$9.5 million), Individuals (US$4.3 million) and Banks (US$4.0 million) remained on the buying side.

The rally in global commodities brings its adverse impact to Pakistan, putting further pressures on local currency amidst rising import bill. For every US$5 change in Oil prices, Pakistan's CAD rises by US$1.2 billion. Sectors such as Cement may remain under pressure in near term due to escalation in energy prices, while supply chain disruptions for metals and semi-conductors may hinder the ability of Automobile sector to supply their products on time. On the flipside, analysts expect MUGHAL in steel sector to actually benefit from the exports of Copper at a higher prevailing price. In terms of valuations, market remains extremely attractive, providing a huge opportunity to take exposure in value stocks.

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