Stock Review- Stocks on the mending as upcoming imf meetings and monetary policy may sustain bulls.

The week ended on 13th September 2019 was reduced to three trading days due to Ashura holidays. Coming-off from holidays, the benchmark index of Pakistan Stock Exchange (PSX) continued with the trend of earlier week and gained 3.3%WoW to close at 31,481 points. T-Bill Auction (where 12M yield declined by 31bps) seeded market expectations of a cut in discount rate, providing critical catalyst for market performance. Other news providing the impetus included: 1) positive news flows from ongoing meeting of APG, an associate of FATF, and 2) the Government of Pakistan reassuring meeting IMF targets on performance and structural benchmarks for 1QFY20, boosting investors' sentiments.

Average daily volume rose to 129.5 million as compared to 93.0 million a week ago. Based on NCCPL data, foreigners remained net seller to US$1.01 million. On the local's side, Mutual Funds emerged net buyer US$5.53 million, but individuals remained net sellers with US$4.8 million. Sectoral developments included: 1) Supreme Court (SC) moved for 'out of turn' hearing of GIDC case, 2) Fertilizer companies increasing retail price following delay in implementation of GIDC Ordinance and 3) Rs200 billion Energy Sukuk stuck with SBP owing to delay in issuance of sovereign guarantees.

Top performers of the week included: KAPCO, POL, PPL, LUCK and BAFL, while laggards included: HASCOL, MLCF, GWLC and PIOC. With CPI numbers and the latest T-Bill auction pointing towards the end of the tightening cycle, monetary policy announcement scheduled for 16th September is likely to set market direction for next week. News flows relating to APG meeting would also influence the market sentiments.

The total liquid foreign exchange reserves held by Pakistan were reported at US$15,751.7 million on 6th September 2019. The break-up was: reserves held by the State Bank of Pakistan (SBP) were US$8,462.3 million and net reserves held by commercial banks were US$7,289.4 million. During the week under review reserves held by SBP increased by US$182 million to US$8,462.3 million, due to official inflows.

During August, the benchmark index of Pakistan Stock Exchange (PSX) posted decline despite a rise in trading activity, with incessant selling from institutional investors and terse outcomes from the meeting of the APG of FATF depreciative for investor sentiments. Amongst local investors, individual participation levels surpassed other participants with net buying of US$27.9 million was followed by...