PSX dips as political, economic woes persist

KSE-100 index drops 635 points, or 1.53%, and settles at 40,964

KARACHI:

Owing to the uncertainty about International Monetary Fund (IMF) programme, growing political noise, speculation ahead of federal budget announcement coupled with several other developments, Pakistan Stock Exchange (PSX) dropped by over 600 points, closing the week in the red.

The week kicked off on a negative note as political turmoil gripped the market and resultantly investor interest ebbed, which pulled the KSE-100 index down by almost 400 points on Monday.

The bourse came under further pressure on Tuesday with the delay in resumption of IMF loan programme and rupee depreciation restricting investors from taking fresh positions. By the end of trading, the index inched closer to the 40,000-point mark.

On Wednesday, the investors tried to recoup some of the losses and protect the 41,000 mark on hopes of positive developments about reviving the IMF programme.

Political trouble and macroeconomic headwinds were the major worries due to which investors scrambled to offload their positions on Thursday. There was also speculation about imposition of new taxes in the FY24 budget.

On Friday, the index succumbed to selling pressure and dropped below 41,000 after struggling throughout the week to stay above the barrier.

The KSE-100 index dipped 635 points, or 1.53% week-on-week, and settled at 40,964 at the end of the week.

JS Global analyst Muhammad Waqas Ghani, in his report, noted that the week started on a negative note over worsening political situation and delay in resumption of IMF programme.

Negative momentum persisted as investors sought to secure profit amid mixed developments on the political and macro landscape, he said.

Budget-related news continued to emerge during the week including the macro targets. The federal government set the fiscal deficit target at 5% of GDP with revenue receipts of around Rs9 trillion in FY24.

On the IMF front, “the stance regarding continued talks was maintained by both the government and IMF officials,” the analyst said. Notices from listed companies started to pour in, announcing increases in share capital following the proposal of tax imposition on distributable reserves of listed and non-listed companies by the reforms commission.

State Bank’s forex reserves declined by $119 million to $4.2 billion, translating into an import cover of around one month, the JS analyst added.

Arif Habib Limited, in its report, said market sentiment remained predominantly negative during the week, primarily due to the prevailing uncertainty regarding the resumption of IMF programme.

Economic numbers showed that GDP grew by 0.29% in FY23, a sharp fall compared to the previous year’s 6.1% growth.

Additionally, Pakistani rupee depreciated against the US dollar by Rs0.67 (-0.23%) week-on-week, closing at Rs285.15/$.

In terms of sectors, positive contribution to the bourse came from food and personal care products (25 points), textile composite (18 points), and textile spinning (7 points).

Negative contribution came from commercial banks (112 points), oil and gas exploration companies (70 points), technology and communication (63 points), power (56 points), and fertiliser (44 points).

In terms of stocks, positive contributors were Nestle Pakistan (18 points), Engro Corporation (16 points), Unilever Pakistan Foods (14 points), Gul Ahmed Textile Mills (13 points), and Colgate-Palmolive (Pakistan) (9 points).

Negative contribution came from Hub Power (47 points), United Bank (39 points), Oil and Gas Development Company (39 points), Pakistan Petroleum (36 points), and Systems Limited (28 points).

Foreigners turned net sellers during the week under review as they sold stocks worth $2.1 million as compared to net buying of $0.6 million last week, the AHL report added.

Published in The Express Tribune, May 28^th, 2023.

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