April 30, 2022 (MLN): The performance of the stock market during the month of April 2022 was capped by worsening economic fundamentals, despite decline in uncertainty on the political front following the formation of the new coalition government which provided investors a relief.
Accordingly, the index increased by 320 points or 0.7% MoM to settle the month at the 45,249 points level. However, in USD terms, the index dipped by 0.58% MoM, mainly on the back of PKR depreciation against the greenback as the month to date (MTD) data shows that the local unit has lost 1.16% of its value against the USD to stand at Rs185.63.
In the initial two weeks of the month, the market saw a sharp recovery, gaining 1,670 points after Mr Shahbaz Sharif took oath as Prime Minister in place of Imran Khan who was removed from the position through voting of a no-confidence motion in the National assembly. Meanwhile, PKR was also appreciated by 3% to Rs181.4.
However, the rally was short-lived as the decline in uncertainty on the political front shifted the focus towards important economic woes like declining foreign reserves which dipped to $16.67bn as of the week ended on April 23, 2022, unstable PKR against USD etc., allowing bears to enter the market.
As soon as news flow came in suggesting that IMF is demanding a reversal in fuel subsidies along with other tightening measures to resume the program with a total of USD8bn, selling pressure fueled as later in the month the index went down 1,352 points.
Furthermore, the subsequent increase in T-bills yields in the auction held during the month (6M yields reached 14.99% in the latest auction) also weighed down on investors' sentiments.
The performance of the market was also marked by the strong earnings announcement, as companies listed under PSX recorded the highest ever profits of Rs822 billion during 9MFY22, up by 23% YoY compared to the same period last year. Similarly, the quarterly performance was also a record high of Rs320 billion during Jan-Mar'22, up by 33.7% YoY.
The other major events during the month which impacted the market were; the massive increase in the policy rate, revising to 12.25%, remittances reaching $28.3bn, and 6-month KIBOR has hit a 22-year high at 14.99%.
Overall, the market witnessed 8 bullish and 11 bearish sessions. The average daily traded volume and value improved to 282mn shares and Rs7.7bn, showing an increase of 26% and 2.9% MoM respectively.
Sector-wise, the performance chart during the month was led by Fertilizer, Chemical, Banks, Refinery, and Technology, each contributing 432, 226, 193, 107, and 86 points respectively.
On the flip side, the top 5 worst-performing sectors throughout the month were Cement, Power Generation & Distribution, Miscellaneous, Engineering, and Food & Personal Care Products. These sectors collectively took away 731 points from the index.
Scrip-wise, EPCL, ENGRO, EFERT, FFC, and MEBL performed well during the month as they added 186, 173, 132, 113, and 110 points to the index respectively, whereas LUCK, HUBC, PSEL, DGKC, and CHCC were the worst performing securities during April 2022.
Meanwhile, the KSE All Share market cap decreased by Rs63.2 billion or 0.83% over the month, being recorded at Rs7.5trillion as compared to a market cap of Rs7.58tr recorded last month.
Flow wise, foreigners were the net sellers during the month, offloading $5mn from the equity market compared to $23.3mn worth of outflows last month. On the local side, the majority of the selling was absorbed by Individuals, Companies and Organizations amounting to $48.6mn, $7mn, and $5.4mn respectively. However, Mutual Funds and Insurance companies stood on the other side with net selling of $34.6mn and $19mn respectively.
In the month of May, the direction of the market will remain uncertain until the stability in USD-PKR and international commodity prices. Moreover, the market will also take account of various key events next month such as the monetary policy meeting and a further update on technical level talks with IMF. Whereas the current visit of PM to Saudi can also lead to some material announcement, analyst at Arif Habib Limited said.
Furthermore, political, and economic uncertainty will continue to affect the performance of the local bourse in the near term.
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