KARACHI: Pakistan Stock Exchange (PSX) remained bearish for the sixth consecutive week amid depleting foreign exchange reserves, domestic political turbulence and economic uncertainty, with the benchmark KSE-100 Index shedding 239.26 points (-0.56 percent) to close at 42,861.45 points.
Overall, the benchmark index has shed 3,740 points or 8.02 percent during the last six weeks. During the previous week, the benchmark index nosedived during the first two sessions of the week and shed 660.46 points (-1.53 percent) on Monday and 489.93 points (-1.15 percent) on Tuesday, as the State Bank of Pakistan hiked the key policy rate by 150 basis points to an 11-year high at 13.75 percent.
Moreover, the heated political environment, besides the persistently deteriorating macroeconomic outlook, also kept the investors’ interest in check. The falling Pakistani rupee against the US dollar amid fast depleting foreign exchange reserves continued to haunt the trading atmosphere at the bourse, thus keeping the bulls at bay.
However, the index closed in green during the next three sessions by gaining 62.34 points (+0.15 percent) on Wednesday, 529.05 points (+1.26 percent) on Thursday and 319.74 (0.75 percent) on Friday.
The last three sessions helped the index trim most of the losses on the back of value hunting of attractive stocks, decision of Pakistan Tehreek-e-Insaf’s (PTI) Chairman Imran Khan to postpone the sit-in in the federal capital, and the government’s decision to increase petroleum prices in a bid to resume International Monetary Fund (IMF) loan programme. The government’s step helped strengthen rupee which also gave a boost to the investors’ confidence.
According to a report of Topline Securities, concerns over the IMF loan programme amid declining foreign exchange reserves and increasing political noise weighed on investors’ sentiment.
However, some recovery was observed in the last few trading sessions as the PTI chief decided to postpone the sit-in and the government increased prices of petroleum products, thus paving the way for the IMF programme, the report added.
During the week under review, average daily traded volume increased 27 percent on a week-on-week basis to 281 million shares, while average daily traded value inclined 26 percent week-on-week to $39 million.
The sectors taking the index towards north were technology and communication (66 points), refinery (40 points), automobile assemblers (32 points), oil and gas marketing companies (15 points) and food and personal care products (14 points).
The sectors taking the index towards south were fertilizer (132 points), commercial banks (76 points), cement (56 points), oil and gas exploration companies (41 points) and power generation and distribution (29 points).
Foreign selling was witnessed during the week, which came in at $1.5 million as compared to net selling of $6.1 million in the previous week. Major selling was witnessed in cement firms ($1.8 million) and banks ($1.4 million). On the domestic front, buying was reported by individuals ($11 million), followed by proprietary trading brokers ($2.9 million).
According to Arif Habib Limited, the market may remain jittery in the upcoming week due to political strains, as PTI has given six days to the government to announce elections.
However, it appears that the government’s removal of the subsidy on fuel and electricity will help revive the IMF loan programme. Once the package comes through, other sources of foreign exchange should also open up, which will be a positive for the market.
