Pakistan Stock Exchange (PSX) remained somewhat volatile during the outgoing week and closed almost flat amid heavy trading and profit-taking by investors.
The market could not make a rapid surge like previous weeks despite investor hopes ahead of International Monetary Fund’s (IMF) board meeting on January 11 for loan approval and an increase in the State Bank of Pakistan’s (SBP) foreign currency reserves.
During the week, a couple of merger and acquisition deals were announced that sparked hopes among market players while the SBP left its policy rate unchanged in line with market expectations.
At the beginning of the week, the KSE-100 index fell 211 points as investors resorted to profit-booking after a prolonged record-breaking rally following reports of a 10% decline in remittances and an increase in industrial energy tariffs.
Next day, the market rebounded with significant gains and reached a new all-time high, driven by expectations of a status quo in the monetary policy announcement and the Roshan Digital Account (RDA) inflows crossing the $7 billion mark.
On Wednesday, the benchmark index made a big correction when institutional profit-taking mounted pressure on the market and investors offloaded their holdings at higher valuations. On Thursday, the bourse recovered somewhat from the previous day’s massive correction as investors returned to bid for attractive stocks in the backdrop of Pakistan Telecommunication Company Limited’s (PTCL) acquisition of 100% stake in Telenor.
Read Bulls snatch control as stocks rally
Friday saw a handsome rally amid heavy trading due to hopes of release of IMF’s second loan tranche of $700 million next month, which pushed the index above 66,000 points. Overall, the KSE-100 index edged down 94 points, or 0.14% week-on-week (WoW), and settled at 66,130.
JS Research analyst Shagufta Irshad, in her review, said that the KSE-100 closed the week down by 0.1% while average daily turnover rose 22% WoW. She attributed the increase to fresh inflows from retail investors and mutual funds, countering intra-day corrections.
Energy sector remained in the limelight, with positive signals stemming from hydrocarbon discoveries, constructive measures being taken to control the circular debt build-up, Economic Coordination Committee’s approval of special incentives for Oil and Gas Development Company’s Jhal Magsi field and Saudi Aramco’s acquisition of a major stake in GO Pakistan.
In other news, Pakistan Petroleum Information Service (PPIS) data revealed a 3.6% year-on-year (YoY) increase in oil sales and 5.5% YoY decline in gas production during October 2023. PTCL also drew investor attention as it sealed a deal to acquire 100% stake in Telenor Pakistan, she said. Cement and auto sectors reported a dip in volumes for November 2023, declining by 2% and 65% YoY, respectively. In addition, the SBP opted to keep its policy rate unchanged at 22%, indicating confidence in Pakistan’s debt servicing capabilities, tax collection and reserves aligning with targets set by the IMF, the JS analyst added.
Arif Habib Limited, in its report, noted that the KSE-100 index experienced a roller-coaster ride during the week. Among the highlights was the central bank keeping the policy rate unchanged, which was in line with expectations. Moreover, in T-bills’ auction, there was no significant change in cut-off yields across all tenors.
Fitch kept Pakistan’s long-term foreign currency issuer default rating unchanged at ‘CCC’, despite favourable economic signs like the strengthening of the rupee and the continuation of a standby arrangement with the IMF, it said.
In other notable reports, large-scale manufacturing industries posted a 4.1% YoY decline during October 2023 (-2% month-on-month). Additionally, the SBP’s reserves rose $21 million to $7 billion. Pakistani rupee closed at 283.26 against the greenback, appreciating by Rs0.61, or 0.22% WoW.
Sector-wise negative contribution came from commercial banks (642 points), food and personal care (71 points), miscellaneous (54 points), textile composite (47 points) and leather and tanneries (35 points).
Foreigners’ buying continued that amounted to $13.1 million compared to net buying of $9.6 million in the previous week.
Published in The Express Tribune, December 17th, 2023.
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