PACRA Maintains Positive Outlook on BankIslami Entity Ratings

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July 3, 2022 (MLN): This week, the local stock market gained 579 points or up 1.4% WoW and closed at 41,630 index levels.

The market has seen a significant rally over the past week, with the credit of $2 billion from Chinese SAFE loans pushing SBP reserves to $10 billion.

In addition, $3.8 billion in debt relief by G-20 countries to Pakistan and the hope of resuming IMF financing program as Pakistan received a memorandum of economic and financial policies ( MEFP) for the combined 7th and 8th IMF tranches that could lead to $2.bn inflows to national reserves also supported the stock market rally.

However, market sentiment was hurt by another fuel price hike by the government to meet IMF demand. Following this, the market was unable to sustain its momentum and went on a topsy-turvy course for the remainder of the week.

Additionally, despite the highest ever tax collection of Rs 6.1 trillion, up 29% YoY in FY22, investor sentiment did not improve mainly in due to 13-year high inflation on June 22 and the widening current account deficit which was reported at $15.2 billion for 11MFY22. In addition, fears of a 100-150 basis point hike in the policy rate in the next MPS further dampened market sentiment.

In dollars, the index rallied 2.7% as the PKR strengthened by 2.4 rupees against the greenback to stand at 204.85 rupees on June 30, 2022.

Overall, the stock market had 3 sessions in favor of the bull while 2 sessions were in favor of the bear. The KSE-100 index hovered between highs and lows of 2,149 and 41,052 levels, respectively, before stabilizing for the week at 41,630 levels.

From a sector perspective, cement, fertilizer, power generation and distribution, oil and gas exploration companies, banks kept the index in green territory adding 97, 79, 74, 69 respectively and 55 index points.

Contrary to this, Investment Banks, Refineries, Cable and Electrical Products, Sugar and Allied Industries and Modarabas collectively took 22 points off the stock market during the week.

From a certificates perspective, HUBC, POL, LUCK, EFERT and MARI were the best performing stocks during the week, adding 83, 64, 47, 39 and 36 points to the index respectively. While HBL, EPCL, OGDC, KAPCO and DAWH collectively snatched 100 points from the index.

Meanwhile, the market capitalization of KSE All Share rose by Rs 100.2 billion or 1.46% during the week, being recorded at Rs 6.9 trillion from a market cap of 6.8 tr recorded last week.

In terms of flows, foreigners became net buyers during the week, buying shares worth $1.52 million versus net selling $2.3 million last week. Sector-wise, the largest sale was seen in Fertilizers ($0.3 million) and all other sectors ($0.2 million).

On the local side, the majority of sales were reported by insurance companies and mutual funds amounting to $12.2 million and $2.6 million, respectively. However, banks and individuals stood on the other side with net purchases of $6.8 million and $4 million respectively.

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