November 1, 2021 (MLN): Alongside other global financial markets, Pakistan Stock Market managed to wrap the month of October on a cheerful note, as the benchmark KSE-100 index recovered 1,285.11 points or 2.86% to close at 46,184.71 following the highest monthly loss of 5.31% in September since this year.
In the earlier part of the month, the index had its nervous moments, down by 3.74% at one point due to fevered speculation on domestic politics and the IMF’s tough negotiations. While deteriorating economic indicators as rupee had been in a free fall against the greenback, hitting all-time low to 175 against USD during the month on higher imports and rising international commodity prices created most of the ruckus on the trading floors. The other major event that impacted during the month includes the FATF’s decision to keep Pakistan on the grey list till February’22.
However, these concerns seemed to lose intensity towards month-end after Saudi Arabia agreed to provide USD4.2 billion financial support to Pakistan in the form of a cash deposit and oil on deferred payments, reviving investors’ interest not only in domestic equities but also in the forex market as PKR recovered by 2.3% against the USD since the announcement of Saudi package.
Another development responsible for providing optimism in domestic equities was dwindling in Current Account Deficit (CAD) by 24.4% MoM in September. This coupled with strong earnings for heavy-weight sectors that supported index levels. Going by the report of Spectrum Securities, ease off in coal prices following Russia’s intentions to increase natural gas supply to Europe and China pushing miners to increase output was also the key trigger for the month.
Sector-wise, Commercial Banks, Cement, Oil & Gas Exploration Companies, Fertilizer and Chemical emerged as the best-performing sectors during the month, as they contributed around 916, 303, 256, 187 and 135 points respectively to the benchmark index. To be specific, the scrips of HBL (+325), UBL (+298), MARI (+140), LUCK (+137), and MCB (+132) turned out to be the most attractive ones.
During the month, 67 companies traded in green while 33 landed in the red zone. The All-Share Market Cap increased to USD46.33 billion, i.e. 1.32% higher than the previous month. However, in terms of PKR, the All-Share Market Cap surged to Rs7.95 trillion i.e., 1.91% higher as compared to the last month.
Figures released by NCCPL showed that foreign investors sold net USD30.86mn worth of stocks during the month with foreign corporates doing the bulk of selling at USD56mn. On the local front, Insurance Companies purchased USD20.70mn worth of stocks, followed by USD10.04mn and USD5.73mn worth of stocks bought by Other Organizations and Individual Investors respectively. On the other hand, Companies sold securities worth USD18.79mn.
Outlook
So far, from the fiscal year to date, the 100-index has lost 2.47% but may be primed to post a strong rally going forward if IMF and authorities reach a consensus regarding the revival of USD6.2bn program.
Finance Minister Shaukat Tarin has stated that an agreement with the IMF for program resumption is close and that the outstanding issues pertaining to taxation only.
It is possible that remedial steps include the removal of GST exemptions. The program resumption might lead to improved confidence in the macroeconomic outlook, which can complement strong corporate profitability, said Raza Jafri Head of Equities at Intermarket Securities said.
On the monetary front, Nov’21 MPS would be a key event for the market as another hike in the policy rate, in view of Arif Habib Limited appears likely, which may translate to some pressure on leveraged companies, while banks could stay under the limelight.
Copyright Mettis Link News
27784
