Stocks sustain bullish trend

Benchmark KSE-100 index gains 265 points to settle at 42,213

KARACHI:

The Pakistan Stock Exchange (PSX) endured a range-bound trading week as the benchmark KSE-100 index oscillated between red and green zones due to multiple developments.

Still, three of the trading sessions closed in the green, which helped push up the index by 265 points week-on-week.

The week kicked off on a negative note with the market dropping nearly 200 points owing to political uncertainty following US president’s remarks about Pakistan’s capability of handling its nuclear assets. Investor participation remained subdued on Tuesday, however, market players anticipated a positive announcement from the Financial Action Task Force (FATF) about Pakistan’s removal from its grey list. As a result, the market recovered partially.

The KSE-100 index recorded sharp gains over the easing of tensions between the US and Pakistan following Washington’s statement about confidence in Pakistan’s nuclear capabilities. Positive momentum continued as investors were optimistic after the current account deficit narrowed 72.5% year-on-year to $316 million in September 2022, which was its lowest level since April 2021.

The market came under pressure on Thursday when market players took a cautious stance before the announcement of FATF decision. Pakistani rupee also remained under pressure against the greenback during the week, fuelling dull activity at the bourse. Later, the country exited the grey list, which aided the KSE-100 index to gain nearly 90 points.

Despite political noise and protests, the index maintained the momentum and closed last trading day of the week in the green because of value buying.

The market closed the week at 42,213, up 265 points, or 0.63%, from the previous week. “The week started on a negative note over US president’s remarks about the security of Pakistan’s nuclear arsenal,” said JS Global analyst Muhammad Waqas Ghani.

The index, however, recovered during the week after US State Department’s clarification, dismissing the rumours sparked by President Joe Biden’s comments about the nuclear programme. “Investor participation dropped 14% week-on-week with average volumes standing at 228 million shares,” the analyst said.

Among key performers were tobacco firms (11.9%) and power companies (1.5%) while oil marketing companies (-3.3%) were the key underperformers.

On the news front, finance minister announced the rescheduling of non-Paris Club debt of around $27 billion, largely owed to China. The rupee continued to depreciate, losing 1.1% week-on-week. Moreover, T-bill yields fell slightly by up to 2 basis points in the auction held during the week.

In other news, the current account deficit came in at a 17-month low for September 2022 at $316 million (-53% month-on-month). Furthermore, the ADB approved a $1.5 billion loan for flood relief and the amount was expected to be received in the coming days. Lastly, the week ended with the announcement of ECP’s verdict that disqualified PTI Chairman Imran Khan, the JS analyst said.

Arif Habib Limited, in its report, said that the market commenced trading on a negative note amid the hustle and bustle in the political arena.

Furthermore, Pakistani rupee remained under pressure against the greenback, closing at Rs220.84, down by Rs2.41, or 1%, week-on-week. On the other hand, SBP’s reserves stood unchanged at $7.6 billion.

The momentum shifted towards the green zone since the current account deficit narrowed by 72.5% year-on-year to $316 million in September 2022.

Furthermore, a statement from the US showing confidence in Pakistan’s nuclear assets strengthened the sentiment.

An ADB loan of $1.5 billion was finalised during the week, which kept the momentum strong, the AHL report said.

The market closed at 42,213, gaining 265 points (or 0.63%) week-on-week.

In terms of sectors, positive contribution came from fertiliser (112 points), power (82 points), E&P (49 points), banks (37 points) and tobacco (31 points). Negative contribution came from technology (40 points) and chemical (28 points). Meanwhile, stock-wise positive contributors were Hub Power (80 points), Engro Corporation (77 points), Mari Petroleum (51 points), Pakistan Oilfields (44 points) and Millat Tractors (40 points).

Negative contribution came from Pakistan Petroleum (31 points), Pakistan State Oil (26 points), Systems Limited (19 points), TRG Pakistan (18 points) and Engro Polymer (16 points).

Foreigners continued to buy stocks during the week under review, making purchases of $3.4 million compared to net buying of $12.3 million last week.

Published in The Express Tribune, October 23^rd, 2022.

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