JS Securities Limited – Weekly Review

Karachi,
February 08, 2019 (PPI-OT): Market corrects slightly by 0.5% WoW after a
spirited rally in recent weeks

After a
strong performance during preceding weeks, investors opted for profit taking
this week, taking the index down to 40,887 (-0.5% WoW). Moreover, concerns
regarding the economic scenario stand firmly in place, particularly the
external account and the fiscal deficit, which also curbed the market momentum.
Refreshingly though, volumes were slightly higher, up by 10% WoW where an
average 191mn shares per day were traded during the week, whereas average daily
traded value (in dollar terms) also increased by 26% WoW.

Looking
at sector performance during the week, Cements (+3.4% WoW) were among the
outperformers, on account of declining international coal prices. Weaker global
crude oil prices (down ~5% WoW) led to an underperformance in E and Ps (down
1.5% WoW). Pharmas (+3.6% WoW) were among the major outperformers during the
week, which was likely due to strong CPI numbers for the month of Jan-2019,
given that price increases for medicinal products have been linked by the
government to annual CPI inflation. Foreigners remained net buyers during the
week, with net buying of US$12.2mn, which was lower than US$12.3mn during the
previous week.

This is
the 3rd consecutive week for net foreign buying, where Banking sector witnessed
the highest net buying by foreigners (US$4.8mn). Other major news during the
week included (1) government has proposed to waive off Rs200bn under GIDC
settlement mechanism, (2) the Finance Minister has ruled out downward revision
of FBR revenue target, (3) Ghandara Nissan (GHNL) is likely to begin rolling
out three Datsun models in 2020, (4) State Bank of Pakistan (SBP) reserves
increased by US$38mn to US$8.192bn on a weekly basis, (6) Pakistan has signed
US$10bn gas pipeline agreement with Russia, and (7) Pakistan National Shipping
Corp (PNSC) has bought 2 LR-1 tankers, taking total fleet size to 11.

Headline
inflation increases by 7.2% YoY in Jan-2019

Headline
inflation increased by 7.2% YoY in January, compared to 6.2% YoY during the
preceding month, owing mainly to the quarterly adjustment in house rent index
and growth in electricity index. CPI increased by 1.0% MoM, compared to a
reduction of 0.4% MoM in December.

Cement
dispatches declined 10.7% YoY

Cement
dispatches posted a double digit decline of 10.7% YoY in Jan-2019, where total
dispatches stood at 3.65mn tons. The decline was on account of a plunge in
domestic uptake, which fell by 17.9% YoY to 3.74mn tons. Exports remained
healthy however, with a 67.3% YoY jump during the month.

You May Also Like