AKD Securities Limited – Stock Smart

Karachi, December 29, 2017 (PPI-OT): Weekly Review

In the backdrop of a relatively calm political environment, positive steps taken by the regulator taking a soft stance (permission of foreign participation in PSX share, approval of category B scrips under MTS) have helped in improving the market sentiments. Also, aggressive buying by the mutual funds (net buy: US$13.64mn) lent support to the market. Closing all the trading sessions on a positive note, the benchmark KSE-100 index gained 2.54%WoW (+1,001pts) to close the week at 40,471pts. In tandem trading volume also rose 55.24%WoW to reach at 214.52mn, with 1) WTL (85.28mn shares), 2) TRG (53.64mn shares), 3) KEL (39.85mn shares), 4) PAEL (33.21mn shares) and 5) DSL (32.62mn shares) leading the board.

Key news flows impacting the market during the week included: 1) ECC approving the FBR’s proposal to reduce RD on certain raw material items and allowing export of wheat (3m tons) and sugar (0.3m tons), 2) SECP reportedly making amendments in MTS regulations, which would allow category B securities available for purchase on credit, 3) Fed gov’t restricting import of furnace oil in a bid to extend relief to the domestic refining sector, 4) GoP releasing another PkR2.5bn under the PM’s export package, where total released refunds now stand at PkR16.5bn against total claims of PkR23.5bn, and 5) As per SBP, profit repatriation soaring to US$935mn (+29%YoY) in 5MFY18.

Performance leaders during the week were: 1) CHCC (+10.8%WoW), 2) PIOC (+14.89%WoW), 3) GWLC (+14.05%WoW), 4) FCCL (+10.86%WoW) and 5) DGKC (+10.36%WoW); while laggards included: 1) HBL (-1.75%WoW), 2) NCL (-1.49%WoW), 3) ENGRO (-0.94%WoW), 3) KEL (-0.63%WoW) and 5) MLCF (-0.48%WoW). Foreigners bought US$8.9mn worth of equities compared to net outflow of US$5.4mn in the preceding week.

Outlook

With the start of New Year, ‘January Effect’ is expected to dominate the market going forward, where we see the market sustaining the recent bullish momentum especially when valuations stand at attractive level. However, political noise can once again heat up if opposition parties led by Pakistan Awami Tehreek (PAT) opt for another protest in the Model Town case.

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