Dear Clients,
KSE-100 closed up by 455.1 points to 45,186.5 levels with 293mn volumes. The market preferred to remain green today as SBP clocked in a $2.5b from the Eurobond issuance & government readies itself for the new package with IMF. Expectations are abound that government would extract negotiations in the IMF package – specifically Tariffs for electricity & sharp hike in Tax rates. Fear political damage of abrupt hikes government seems to be securing relaxation just at the time of third wave. The third wave is intense as cases remained higher than 5200 yesterday as well. It seems market is pricing in the growth & IMF’s renegotiations more than the Covid cases as national lockdown is out of question.
Bullishness was witnessed in Refinery, Cements, Technology, Glass, Food & Chemicals sectors. Service continued positive momentum today as yesterday’s book building got massive response. Similarly, Textile sector witnesses positivity as valuations had improved after Rupee’s ascent dismayed investors view on the exports. IMF’s recent assessment expects GDP to grow 4% next year while budget would contain serious tax hikes.
Investors seem to be accumulating for a rally. Although, some share prices are still below the recent peaks they have achieved. April’s earnings seasons would show a sharp earnings rebound for sure. Compound that with SBP’s broad indication of lower interest rates & currency stability after $2.5b, there is not short term material risk at play to the economy. Economy is showing signs of growth but much is dependent upon lower interest rates. Nonetheless, imbalances could quickly appear as Trade Deficit numbers worsen quickly. Putting that aside, stock prices are too cheap to be ignored. Well atleast much better than keeping the money in Bank accounts.
KASB Research
