Bulls stage comeback on positive cues
Bulls staged a comeback at the Pakistan Stock Exchange (PSX) as investors showed optimism on the back of positive triggers, driving the benchmark KSE-100 index higher in the outgoing week.
The week commenced on a positive note and bulls held their firm grip over the bourse, with the index displaying an upward momentum owing to rupee appreciation despite thin trading.
Strong investor interest emerged on Tuesday, mainly driven by anticipation of positive outcome from Prime Minister Shehbaz Sharif’s visit to China. It helped sustain a buying spree and lifted the stock market by nearly 550 points.
Assurances from Chinese President Xi Jinping to further support Pakistan in maintaining its financial stability boosted investor confidence on Wednesday and the KSE-100 index raced towards the 42,000-point mark. The buying activity received another boost on Thursday from trade deficit that recorded a contraction of 27%. It aided the index in shooting past the 42,000 mark.
The stock market, after posting gains for four successive sessions, reversed trend in the final session, weighed down by the gun attack on former prime minster Imran Khan during a long march.
Political tensions flared across the country, hammering investor confidence. Consequently, the KSE-100 index could not sustain the 42,000 mark and retreated into the red zone. Still, the market closed up by 716 points, or 1.7%, at 41,856 compared to the previous week.
“The market followed an upward trend during the week before closing on a negative note following the attack on former PM Imran Khan,” said JS Global analyst Wasil Zaman in a report.
Technology (5%) and oil marketing companies’ (6%) sectors were among the key outperformers whereas the banking (-1%) and food (-2%) sectors were the major underperformers during the week.
On the news front, Finance Minister Ishaq Dar held meetings with representatives of banks in a bid to control manipulation of Pakistani rupee’s value against the US dollar. The Consumer Price Index (CPI) for October 2022 came in at 26.6% year-on-year as prices of food items continued to surge.
Data of petrol and diesel sales for the month showed a recovery of 8% and 37% respectively on a month-on-month basis. However, cumulative numbers for 4MFY23 remained negative, primarily driven by subdued demand for vehicles, he said.
Similarly, cement dispatches remained dull during October, totalling 4.25 million tons, down by 19% year-on-year. Trade deficit for the month came in at $2.3 billion, down 3% month-on-month because of 13% decline in imports.
State Bank’s foreign currency reserves increased by $1.5 billion to $8.9 billion with Asian Development Bank (ADB) inflows during the week, the JS Global analyst said. Arif Habib Limited, in its report, said that the market commenced trading on a positive note and the momentum continued throughout the week with PM’s visit to China.
Furthermore, the trade deficit narrowed by 26.59% to $11.469 billion in the first four months of current fiscal year compared to $15.624 billion in the same period of last year. Pakistani rupee was slightly up against the greenback, closing at Rs221.95 (up by 0.2% week-on-week).
However, towards the end of the week, the market went down due to an attack on former prime minister Imran Khan, it said.
The market closed at 41,856, gaining 716 points (1.7%) week-on-week.
In terms of sectors, positive contribution came from technology and communication (168 points), oil and gas exploration companies (144 points), fertiliser (107 points), power generation and distribution (85 points) and cement (66 points).
Negative contribution came from insurance (10 points), food and personal care products (9 points), and paper and board (8 points).
Stock-wise positive contributors were TRG Pakistan (101 points), Pakistan Oilfields (89 points), Hub Power (74 points), Systems Limited (53 points) and Engro Corporation (43 points).
Negative contribution came from Meezan Bank (31 points), Nestle Pakistan (15 points), Habib Bank (12 points), Pakistan Services (12 points) and Adamjee Insurance (10 points).
Foreigners bought stocks during the week under review, making purchases of $1.58 million compared to net selling of $0.97 million last week.
On the domestic front, selling was reported by banks ($0.9 million), fertiliser firms ($0.8 million) and other sectors ($0.3 million).
Published in The Express Tribune, November 6th, 2022.
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