Stock Review - Stock review December 2022 - Index posts 1.4%wow gain amid political uncertainty.

Byline: SHABBIR KAZMI

The week ended on April 28, 2023 was marred with political uncertainty. The United States asked Pakistan to move ahead on stalled reforms by the IMF, while promising technical help in worst economic times. The IMF awaits clarity on the cross fuel subsidy scheme.

In addition to this, foreign exchange reserves inched by US$30 million to US$4.5 billion as on April 20, 2023, culminating to an import cover of less than a month.

The KSE-100 index closed the week at 41,581 points, posting 1.40%WoW gain. Participation in the market was a pleasant surprise, daily trading volumes averaging a little above 208 million shares during the week as compared to around 105 million shares in the prior week depicting 98%WoW gain.

Other major news flows during the week included: 1) Saudi Arabia expected to sign deal for US$2 billion deposits, 2) GoP cuts growth rate to 0.8 percent, 3) profit repatriation during first 9 months of the current financial year plunges by 82% to US$233 million, 4) CPPA-G seeks positive adjustment of PKR1.17/unit, 5) regulator asks DISCOS to freeze capacity payments and 6) GoP bank borrowings surge 182% to PKR3 trillion.

Top performing sectors were: Vanaspati and Allied Industries, Tobacco, and Investment Banks, while the least favorite sectors included: Close End Mutual Funds, Leasing Companies and Glass and Ceramics.

Top performing scrips were: POML, SRVI, DAWH, UBL, and MUREB, while laggards included: PGLC, HGFA, KAPCO, BOP, and PIBTL.

Flow wise, companies were the major buyers with net buy of US$15.9 million, followed by individuals with net buy of US$14.17 million, while Mutual Funds were major sellers during the week, with a net sell of US$1.63 million.

According to media reports, Saudi Arabia and UAE have intimated IMF on financing support giving a relief on external financing shortfall of US$6 billion will dictate the market performance in near term. Moreover, political situation will be in limelight till general elections are held. Keeping that in view, analysts continue to advice scrips that have dollar-denominated revenue streams which hedges the investor against the currency risk, that include the Technology and EandP sectors.

Headline inflation in the country is expected to clock in at 36.5%YoY for the month of April 2023, as compared to 35.4%YoY in the earlier month, taking the FY23TD average to 28.1%YoY. On a sequential basis, analysts' expectations correspond to a 2.4%MoM increase in CPI. As has...