Stock Watch

Bulls enter PSX on clarity of IMF deal; stocks gain 740 points
Summary

The clarity on IMF deal was disclosed by Adviser to PM on Finance Shaukat Tarin while talking to media persons after speaking as chief guest at an award distribution ceremony of Pakistan Centre for the Philanthropy (PCP). According to him IMF facility hinges on ‘5 prior actions’ the three major prior actions are power tariff, withdrawal of exemptions and agreed autonomy of the State Bank of Pakistan, while he did not reveal the remaining two and stated that they are of less importance.

The revelation of Mr. Tarin created positivity in the market as investors feel that rupee would be strengthen as soon as the Fund program is revised after completion of the sixth review economics will improve.

The early calling of MPC by SBP indicated tightening of monetary policy and earlier increasing banks’ cash requirement (CRR) by 1 percent to 6 percent shows seriousness of SBP to control rising inflation.

On these developments and LSM growth the sentiment of the market turned positive and KSE-100 index went up 1.6% WoW.

The KSE-100 index during the week gained 740 points to close at 46,489.41. The market participation drops by 22% to average 244m shares from 316m of previous week. The market capitalization increased by Rs126 billion to close at Rs.7,945 trillion.

Monday: KSE-100 index 45,736.26 Change (-12.89) Vol 173 m Mkt Cap Rs.7808 T

Tuesday: KSE-100 index 46,542.91 Change (+806.65) Vol 243 m Mkt Capt Rs.7,925 T

Wednesday: KSE-100 index 46,194.42 Change (-348.49) Vol 238 m Mkt Capt Rs.7,874 T

Thursday: KSE-100 index 46,110.50 Change (-82.92) Vol 264 m Mkt Capt Rs7.875 T

Friday: KSE-100 index 46,489.41 Change (+378.91) Vol 304 m Mkt Capt Rs7,945 T

Participants/Activity

Foreigners were net seller $24.94m during the week; companies were buyer 6.68m, Banks were seller $3.58m ; Mutual fund net buyer $6.26m individuals net seller $2.04m and Insurance were buyer $13.51m.

Volume leaders during the week were: Ghani Global 111m; Services Fabrics 65m; Merit Packaging 54m; TPL Properties 40m; Fauji Foods 29m; World Cal Tel 21m; Hascol Petroleum 19m; Trg Pak 16m; First National Equities 14m; Waves Singer 11m; Telecard Ltd 10m;and Unity Foods 9m.

Participants: Av. Total 347; Gain 162; Loss 162 and Unchanged 23.

Triggers

– SBP reserves declined by $381m to $16.945bn during the week ended Nov 12 reserves of the commercial Bank fell by $95m to $6.605bn while overall reserves fell by $475m to 23.55bn.

– Auto financing reached Rs.346bn as of October showing a jump of 44 per cent year-on-year and 2.2 per cent on month-on-month basis as figures released by SBP

– SBP has called on early MPC (Monetary Policy Committee) meeting on Friday Nov 19 instead of Nov 26 to address the “recent unforeseen developments,” that have changed the outlook for inflation and balance of payment.

– PM to launch tracking system for sugar industry on Nov 23.

– Textile exports up 26.55 per cent in 4MFY22.

– Foreign direct investment falls 12 per cent in July-Oct.

– The government rejected almost all competitive bids in the auction of treasury bills held on Wednesday while it accepted only Rs.0.5 bn for three months only

– Weekly inflation sees sixth consecutive increase of 1.07 per cent for the week ended on Nov.18 driven by a sharp rise in prices of essential food items

Conclusion

It is expected that the rise of 100 or more bps on the discount rate in MPC will create volatility in the market in the upcoming roll over week at PSX.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: Nov 20, 2021

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