Bulls were in full charge at the Pakistan Stock Exchange (PSX) in the outgoing week as they sent the benchmark KSE-100 index to a record high around 61,700 points with impressive week-on-week gains of 2,605 points, or 4.4%.
The bulls dominated proceedings for almost the entire week as they took cue from a host of encouraging factors like a sharp increase in investment by foreign portfolio investors, the rollover of $3 billion in Saudi deposits at the State Bank of Pakistan (SBP) and the expected release of $700 million by the International Monetary Fund (IMF) following its executive board meeting next week.
Similarly, the weekly inflating reading, measured by the Sensitive Price Indicator, came down 0.23%, yields of T-bills fell and the Federal Board of Revenue (FBR) exceeded its tax collection target.
At the beginning of the week, the KSE-100 index opened on a highly positive note when it reached unprecedented levels in a record-breaking rally, fuelled by robust institutional interest across various sectors on the back of encouraging economic indicators like a sharp fall in current account deficit and a notable rise in remittances.
Next day, investors resorted to extensive buying of attractive stocks following the signing of billions of dollars in agreements between Pakistan and the UAE for boosting economic and strategic cooperation during the prime minister’s visit.
On Wednesday, the stock market took a brief pause following World Bank Vice President for South Asia Martin Raiser’s remarks that Pakistan’s economy was stuck in a low growth trap, citing that the culture of corruption, landlords and industrialists was resisting reforms. Consequently, the index experienced a correction of over 200 points.
The following day, the bourse closed nearly flat as it crept up 29 points owing to profit-taking by investors, which restricted the market from making a big leap in line with the recent trend.
PSX on Friday exhibited a highly impressive performance as it surged around 1,150 points and touched a new record high, supported by rupee stability and growing foreign currency reserves.
The bourse made a rapid advance amid rollover of $3 billion in Saudi deposits and soaring foreign portfolio investment.
The benchmark KSE-100 index closed the week at 61,691 points, up 4.4% week-on-week (WoW).
JS Global analyst Shagufta Irshad, in her review, wrote that the KSE-100 continued to post positive returns during the outgoing week. “Volumes and inflows remained encouraging, with average daily turnover showing an 8% WoW increase and foreign portfolio investment rising 126% WoW,” she said.
Among major events, the T-bills’ cut-off yields fell 5-7 basis points while the FBR’s tax collection exceeded target by Rs91 billion for the first five months of FY24.
Also, the government decided to keep petrol price unchanged for the December 1-15 fortnight while diesel price was reduced by Rs7 per litre. Pakistan Bureau of Statistics commenced the release of quarterly growth figures where Pakistan’s gross domestic product (GDP) rose 2.13% for 1QFY24, primarily led by the agriculture sector, she said.
SBP’s foreign exchange reserves remained stable at $7.2 billion and the $3 billion Saudi loan rollover for 12 months came as a relief.
During the week, the Islamabad High Court suspended the collection of 40% tax on windfall gains of banks from foreign exchange business, the JS analyst added.
Topline Securities, in its report, said the stock market’s gains could be largely attributed to the continuous buying by foreign corporate investors and a further decline in T-bill yields, which provided support to the notion that the market expected a reduction in policy rate.
Pakistan’s trade deficit for November 2023 came in at $1.9 billion, down 13% month-on-month and the Consumer Price Index for the month rose 29.2% year-on-year.
“Investors’ participation continued to remain high as average daily traded volumes and value stood at 626 million shares and Rs23 billion, respectively,” Topline added.
Published in The Express Tribune, December 3rd, 2023.
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