Daily Times

Political uncertainty, poor economic statistics, and devaluation of the currency all contributed to an unstable trading environment at Pakistan Stock Exchange (PSX) this week, dampening investor confidence.

The Supreme Court proceedings on the validity of the National Assembly Deputy Speaker’s judgment have kept the domestic political arena hot. For most of the week, political and constitutional uncertainty hung over the bourse, preventing the market from making any significant advances. Due to these factors, on a weekly basis, the benchmark KSE-100 index fell by 708 points, or 1.56 percent, to complete the week at 44,445 points.

Dr. Arif Alvi’s decision to dissolve parliament and Qasim Khan Suri’s refusal to accept the no-confidence motion sparked a bloodbath last Monday, which resulted in the stock market losing more than 1,200 points. As a result of the dual developments, investors rushed to sell their investments in the country’s stock market and reaped the rewards.

In a two-day bull run, the market gained 200 points, mostly as a result of market players cherry-picking. The trend reversed on Tuesday. In response to the early week’s bear market, investors turned to value-hunting, which helped to lift the market’s price.

A drop in worldwide crude oil prices suggested that inflationary pressures were beginning to ease, and this pushed the stock market higher.

The rupee fell to an all-time low of Rs188.17 versus the US dollar on Thursday, and as a result, the stock market lost more than 300 points. Inflation was projected to rise higher, according to market participants, as the local currency fell sharply.

There was a sigh of relief on the market as investors gained confidence following clarification on the political upheaval.

After Pakistan’s Supreme Court declared the deputy speaker of the National Assembly’s ruling unlawful and reinstituted the National Assembly, the market recovered.

Pakistan’s equity market was boosted by a strong rise in the rupee’s value against the US dollar Rs3.5.

An Arif Habib Limited research predicted that the stock market would begin to recover in the following week “as clarity has arisen on the political front. The rollover of $2.3 billion in Chinese loans is also anticipated, which will help to preserve the dwindling reserves.

A weekly decline of 51pc in trading volume and a 42pc decline in daily trading value to 153 million shares were recorded during the week under consideration.

Cement (314 points), oil and gas exploration (89), electricity generation and distribution (80), engineering (65), and food and personal care items (65) were the industries that contributed the most negative points (60 points).

Investment banks/investment businesses/securities companies contributed positively with 4 points, followed by chemicals (70 points), fertilizer (63 points), cable and electrical goods (also 5 points), and real estate investment trusts (also 4 points) (2 points).

Negative contributions in terms of scrip were Lucky Cement, Hubco, TRG Pakistan, DG Khan Cement, Oil and Gas Development Company, and TRG Pakistan (45 points).

For their part, Engro Polymer and Chemicals contributed 55 points, followed by Systems Limited with 26 points, Engro Fertilizers with 24 points, Meezan Bank with 22 points, and MCB with 21 points (19 points).

This week’s foreign sales were $3.78 million, compared to a net sell of $15.55 million in the previous week’s sales. Commercial banks ($3.8 million) and cement ($1.4 million) had a large amount of selling.

Individuals ($14.8 million) made the largest purchases locally, followed by banks/development finance institutions ($4.7 million).

In other big developments, the UAE deferred $2 billion in debt payment at the government’s request, cut-off yields rose by much to 80 basis points, SBP announced a 100 percent cash margin on 177 imports, and the US stated that it backed Pakistan’s constitutional process.