Shabbir H. Kazmi
The Pakistan Stock Exchange the benchmark index closed the week ended on December 29, 2023 at 62,451 points, up 1.2%WoW, marking an end to the calendar year 2023. Overall, the benchmark index showed strong performance, particularly during the 2nd quarter of the current financial year.
The gain in momentum was due to the expectations of release of US$700 million tranche by the IMF, bilateral and multilateral inflows, of which US$250 million is approved from the AIIB to aid sustainable growth.
The reserves increased by US$852 million WoW, which was attributable to inflows from the World Bank, Asian Development Bank and bilateral support from Saudi Arabia and China.
In addition, Market Treasury Bills auction showed a continued strong interest in 12-month paper (PKR1.49 billion realized, with yields almost flat as compared to the earlier auction at 21.4%. This depicted market’s ongoing view of an imminent monetary policy easing owing to lower CPI expectations, hence focus remained on locking in longer term papers.
Average volumes and traded value for the week was recorded at 651.76 million shares, down 46.4%WoW and US$81.35 million, down 0.2%WoW respectively.
On the currency front, PKR appreciated against the US$, ending at 281.86, up 0.24%WoW.
Other news for the week were: 1) GoP announced plan to borrow PKR3.88 trillion from banks during third quarter of the current financial year; 2) POL product prices expected to remain unchanged; 3) Profit repatriation during Jul-Nov rose to US$532 million 312%YoY; 4) CPPA asked Nepra why it seeks tariff hike; 5) GoP borrowing rose to PKR2.876 trillion, up 200%YoY; 6) Islamabad, Riyadh agreed on legal framework for Saudi investment; 8) GoP provided PKR200 billion subsidy to power sector to curtail circular debt.
Sector-wise flows suggest buying was witnessed in Leather & Tanneries/ Automobiles Parts & Accessories/ Sugar & Allied Industries, whereas major selling was seen in Woollen/ Transport/ Vanaspati & Allied Industries. Insurance companies emerged major buyers with net buy of US$4.26 million, while Individuals were net sellers to the tune of to US$6.51 million.
Top performers during the week were, KOHC, KTML, SRVI, PGLC, and PAKT, while laggards included: PSMC, PTC, PSEL, CNERGY, and BNWM.
Volume leaders were: KEL, WTL, FFL, CNERGY and BOP.
Going forward, weanalysts maintain an optimistic outlook on the market in Year 2024 and believe the present rally to continue, albeit with episodes of profit taking.
The stance stems from an optimistic expectation of the IMF’s tranche receipt, triggering further bilateral/ multilateral flows, increased foreign exchange reserves (though current import cover at less than two months continues to present a macroeconomic risk), reduced uncertainty over general elections.
Overall, analysts advise their clients to remain focused on fundamentals, with exposure in high dividend yielding stocks to effectively navigate the inflationary environment.
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