PSX weekly review: KSE-100 ends FY22 on high note

• KSE-100 records gains of 579 points to settle at 41,630 points.
• During the week, average volumes clocked in at 199 million shares.
• The market finished three of the five sessions in the green.

KARACHI: The bulls staged a comeback at the Pakistan Stock Exchange (PSX) after a week of bearish trade as the benchmark KSE-100 finished the last week of FY22 with a gain of 579 points or 1.41% to settle at 41,630 points.

Interest in selected stocks kept the market buoyant as sector-specific developments spurred buying interest. The index maintained an upwards momentum on the back of the approval of the federal budget for the fiscal year 2022-23. The market finished three of the five sessions in the green.

This week the market commenced on a positive note due to the inflows worth $2.3 billion received from China, which took the State Bank of Pakistan (SBP) reserves to $10 billion. Resultantly, the Pakistani rupee strengthened against the greenback settling at Rs204.85 on June 30.

Moreover, Pakistan received a Memorandum of Economic and Financial Policies (MEFP) from IMF, which signalled that the government is inching closer to an agreement with the global lender.

In addition, the National Assembly approved the amendments made in the Finance Bill 2022 which brought clarity to the market, especially to the banking sector.

Furthermore, the independent power producers of the 2002 power policy received the second instalment of Rs96 billion. However, the sentiment was adversely affected by the fiscal measures undertaken by the government (including price hike in petrol and hi-speed diesel by Rs14.85 per litre and Rs13.23 per litre, respectively) to solidify ground for approval of the seventh and eighth reviews.

Moreover, inflation clocked-in at 21.32% for June and the current account deficit widened to $1.4 billion in May which dampened the overall sentiment.

Other major developments during the week were: foreign debt of $13.539 billion incurred in during 11 months of the last fiscal year 2021-22, Economic Coordination Committee (ECC) approved Rs17 billion for RLNG-based power plants, National Electric Power Regulatory Authority (Nepra) allowed K-Electric hike of Rs5.27 per unit, Federal Board of Revenue (FBR) achieved Rs6.1 trillion revised tax collection target.

Meanwhile, foreign selling this week clocked in at $1.52 million against a net sell of $2.39 million recorded last week. Selling was witnessed in fertiliser ($0.3 million), and all other sectors ($0.2 million).

On the local front, major buying was reported by banks ($6.8 million), followed by individuals ($4.1 million).

During the week under review, average volumes clocked in at 199 million shares (down by 34% week-on-week), while average value traded settled at $30 million (down by 31% week-on-week).

Major gainers and losers of the week

Sector-wise positive contributions came from cement (+92 points), power (+74 points), exploration and production (+69 points), fertiliser (+68 points), and banks (+55 points).

On the flip side, negative contributions came from the refinery (-6 points), and cable and electrical goods (-4 points), and technology (-33 points).

Scrip-wise major gainers were Hubco (+83 points), Pakistan Oilfields (+64 points), Lucky Cement (+47 points), Engro Fertiliser (+39 points), and Mari Petroleum (+36 points).

Meanwhile, major losers were HBL (-32 points), Engro Polymer and Chemical (-22 points), Oil and Gas Development Company (-22 points), Kott Addu Power Company (-13 points), and Dawood Hercules (-11 points).

Outlook for next week

A report from AHL believes that with the Monetary Policy Committee scheduled to convene on July 7, market participants will factor in another hike in the benchmark policy rate, especially after the inflation announcement.

“Therefore, short-term jitters cannot be ruled out and the sooner an IMF deal is locked in, the better it will be for the equity bourse.,” it said, advising clients to cherry-pick fundamentally strong blue-chip stocks.

The brokerage house noted that the Chinese loan worth $2.3 billion has already been rolled over and hence, “we expect the market to be positive in the coming week.”

“The KSE-100 is currently trading at a PER of 4.2x (2022) compared to the Asia-Pacific regional average of 11.6x while offering a dividend yield of 9.2% versus 2.9% offered by the region,” the brokerage house stated.