Daily Times

After closing the second consecutive week in the red territory and shedding over 2,100 points in the last fortnight, the Pakistan Stock Exchange (PSX) is likely to have range-bound activity in the week starting today (Monday).

Last week proved to be the worst out of the previous 12 weeks for the PSX amid Russia-Ukraine war, widening of current account deficit to historic levels, rollover week, and political uncertainty. Surging crude oil and commodity prices rattled the financial and equity markets across the globe, and dented the investors’ confidence in the local bourse. However, strong financial results helped the bourse trim some of the losses.

The benchmark KSE-100 Index shed 1,691.63 points (-3.7 percent) to settle at the 43,984.2 level. The KSE-30 Index shed 712.87 points (-4 percent) to close at 17,091.06 points. All share average traded volume during the week surged 20 percent to 229 million shares/day as against 191 million shares a day traded in the preceding week. However, average daily traded value went down 29 percent on a week-on-week basis to $38 million.

In terms of sectors, negative contributions came from technology and communication with 342 points, followed by commercial banks (243 points), cement (222 points), oil and gas exploration companies (146 points) and fertilizer (127 points). The most points taken off the index were by TRG Pakistan (201 points), Lucky Cement (133 points), Systems Limited (109 points), HBL (100 points) and Pakistan Petroleum (76 points).

The sectors taking the index towards north were automobile assembler (18 points), real estate investment trust (10 points) and tobacco (9 points). The scrip wise positive contribution came from UBL (46 points), Millat Tractors (23 points) and Habib Metropolitan Bank (16 points).

Foreign selling continued this week, clocking in at $3.2 million compared to a net sell of $1.97 million last week. Major selling was witnessed in cement ($2.1 million) and technology ($1.7 million). On the local front, buying was reported by banks ($0.6 million) followed by all other sectors ($0.5 million).

The analysts said that Russian President Putin ordered a military operation where forces launched a full invasion in Ukraine on Thursday, resulting in a bloodbath session in the global and domestic markets, as well. Moreover, uncertainty floated on the local political front as opposition seems in the process of securing the number to oust the prime minister in a no-confidence motion, which lowered the investors’ sentiment.

Additionally, the geopolitical uncertainty lifted the international commodities prices to report at record high levels, which further threatened the bourses throughout the week. Going forward, they expect the market will remain range-bound.

They said that Pakistan’s energy import bill is expected to surge to $20 billion in FY22 because of elevated oil and gas prices. On an average, Pakistan imports around 15 million barrels of both crude and refined fuel each month, suggesting a $10/barrel increase in oil prices would enhance Pakistan’s monthly import bill by $150 million.

Moreover, Pakistan’s increasing reliance on re-gasified liquefied natural gas (RLNG) is expected to exert additional strain on the country’s finances, as both oil prices and RLNG spot prices climb further. They warned that higher oil prices could considerably impact the country’s inflationary outlook, particularly after the second-round effects of inflation materialise.