Pakistan Stock Exchange (PSX) endured a mixed trading week, yet it stayed firm and reached a fresh peak above 70,900 with modest gains, which primarily came on the back of Saudi Arabian interest in investing in Pakistan’s mining, energy, oil and gas sectors.
Despite geopolitical tensions, rupee depreciation and stubborn inflation, investors pinned hopes on the finance minister’s engagements with international investors and global lenders on the sidelines of IMF-World Bank meetings in Washington.
Investors also keenly focused on reports pertaining to the imminent release of the last International Monetary Fund (IMF) loan tranche of $1.1 billion under a $3 billion standby arrangement and talks for a new and larger loan package.
In addition, large-scale manufacturing (LSM) industries registered a year-on-year (YoY) growth in their output while State Bank’s foreign currency reserves rose slightly.
At the beginning of the week on Monday, the bourse managed to rise to a new record high in an earnings season rally backed by gains in oil and banking stocks, despite volatile trading and concerns over the escalating geopolitical tensions.
Next day, the PSX recorded its first decline following six consecutive positive sessions over institutional profit-taking coupled with uncertainty surrounding talks with the IMF for a new loan programme and geopolitical tensions.
The KSE-100 index continued to slide on Wednesday when investors opted for profit-booking after the market rose to the intra-day high above 70,700 points.
On Thursday, the index closed with marginal losses as dispirited investors continued to book profits at higher valuations.
PSX snapped on Friday a three-day losing streak and notched up significant gains as the index reached a historic high above 70,900.
Overall, the benchmark KSE-100 index rose by 595 points, or 0.85% week-on-week (WoW), and closed at 70,909.90.
JS Global Deputy Head of Research Muhammad Waqas Ghani, in his report, noted that the KSE-100 index reached an all-time high of 70,910 during the outgoing week, taking WoW gains to 0.8%.
Average volumes compared to the previous short trading week with only two sessions improved 36% WoW while average traded value increased 31%. Refinery and auto-sector stocks were the top performers.
He pointed out that the week started with the federal government announcing an increase of Rs4.5 per litre and Rs8.1 per litre in petrol and diesel prices, respectively, owing to the rise in ex-refinery prices. Saudi foreign minister arrived in Pakistan where he held high-level meetings with the president, prime minister and army chief on various investment initiatives.
Discussions on investment opportunities in mining, energy, oil and gas sectors led to a positive momentum in exploration and production (E&P) sector stocks that posted a 2.2% WoW return at the PSX.
Meanwhile, Pakistan Bureau of Statistics (PBS) reported a YoY growth in LSM industries for February 2024, marking the third consecutive monthly growth, the longest streak since 2022, he said. Cumulatively, the 8MFY24 LSM growth stood slightly negative at -0.5%.
In the bonds auction held during the week, the government could raise only Rs6.8 billion against the target of Rs190 billion. In the T-bills auction, cut-off yields remained broadly unchanged, the JS deputy research head added.
Arif Habib Limited (AHL), in its commentary, wrote that the KSE-100 index reached an all-time high of 70,910 points at the end of the week. The market experienced a mixed sentiment, yet it concluded the week on a positive note, closing at the highest-ever level of 70,910.
The positive momentum was driven by indications from a delegation led by the Saudi foreign minister of investment and development prospects in Pakistan, it said.
Additionally, the IMF reaffirmed its support for Pakistan’s economic reform agenda. The State Bank’s foreign exchange reserves inched up by $14 million and reached $8.1 billion.
Moreover, power generation decreased 8% YoY in March 2024. During the week, Pakistani rupee closed at 278.31 against the US dollar, depreciating Rs0.37, or 0.13% WoW.
Foreigners’ buying continued which came in at $33.9 million compared to net buying of $4.2 million last week.
Published in The Express Tribune, April 21st, 2024.
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