Stock Watch

KSE-100 CLOSES THE YEAR 2021 WITH 1.08% WOW GAIN
Summary

The stock market remained under pressure due to the rollover week. Besides the government decided to table bills paving way for $1 billion IMF tranche. The bill has earlier been passed by the cabinet. The Finance Supplementary Bill 2021 that has been described as a ‘mini budget’ was introduced by the government in the National Assembly to faced loud protests from the opposition. However, it could not go through the Parliament due to lack of quorum. The passage of the bill along with the SBP Amendment Bill is one of the key conditions for the resumption of the $6 billion IMF funding program.

Another important development during the week was injection of Rs.604 billion through 63 – day OMO on Friday against the offered amount of Rs.963 billion. The move is aimed at bring down yield in treasury bills that have risen despite the SBP’s forward guidance suggesting no change in the benchmark interest rate in the immediate future.

The KSE-100 index during the week gained 477.68 points to close at 44,596.07. The market participation increased to 1.2% to 218m. The market capitalization increased by Rs.126 billion to Rs.7,685 trillion.

Participants/Activity

On average shares of 359 companies were traded. Of these 179 were gainers and 157 were loser and 23 remained unchanged.

Foreigners were net buyer $8.10m during the week; companies were buyer by $6.04m, Banks were seller $3.28m; Mutual fund net sellers $3.10m, Insurance seller $1.70m and Individual seller $1.98m.

Volume leaders were: TRG Pak 72m; K-Electric 59m; World Call Telecom 57m; Pakistan Refinery 30m; Unity Foods (R) 24m; Treet Corp 19m; Hum Network 16m; D.S. Industries 11m; Unity Foods 7m and Telecard 4m.

Participants: Cos 359; Gainers 179; Losers 157; and Unchanged 23.

Triggers

– SBP reserves decreased by $298 million to $17.85 billion during the week ending on Dec 24. The holding of the commercial banks were $6.41 billion. Overall reserves totaled $24.27 billion.

Inflation measured through the SPI posted decline of 0.50 per cent for the week ended on December 30 by a sharp decline in the prices of essential food items.

– Pak Refinery has decided to expand and upgrade its production capacity at an estimated cost of $1.2 billion.

SBP has introduced a Shariah-compliant standing ceiling facility and open market operations (injections) for Islamic Banking Institutions to improve the liquidity management framework for Islamic Banking industry and enhance the effectiveness of monetary policy implementation.

– The federal cabinet has approved a revised draft of SBP Amendment Bill 2021, promising complete autonomy to the central bank and placing a complete restriction on the government borrowing from the central Bank.

– The SBP raised Rs.1.26 trillion in the latest Treasury Bills auction on Wednesday. The cut off yield on 3 months paper decreased 19 basis points to 10.59 percent and for 6 months papers went down by five basis points to 11.45 percent. The yield of the 12 months paper stay unchanged at 11.51 percent.

Conclusion

According to the Ministry of Finance the economy will grow at five per cent in the first half of 2022 with substantial improvement on the external side. In the first half of FY22, the GDP growth remained at 4 percent, tax collection exceeded targets, reserves improved and the current account was reported lowest since 2011. The projection is annual exports $32 billion. It projected that the collection of FBR will reach Rs6 trillion and trade deficit to reduce in second half of FY22.

Raees Uddin Khan,
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: Jan 1, 2022

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