Daily Times

Pakistan Stock Exchange (PSX) remained bearish for the second week in a row amid expected hike in interest rate, with the benchmark KSE-100 Index shedding 303.61 points (-0.67 percent) to close at 45,249 points.

Overall, the benchmark index has lost 1,352 points during the last two weeks. Despite a positive start last week, the PSX failed to sustain the bullish momentum and succumbed to profit-taking primarily owing to the dismal macroeconomic cues. The PSX recovered as many as 520 points in the first trading session of the outgoing week, thanks to the positive news trigger relating to the resumption of the International Monetary Fund (IMF) loan programme. The upward movement, however, was short-lived.

The north-bound journey of the benchmark stopped in the next few sessions when the Karachi Interbank Offered Rate or Kibor reached a 14-year high of 14.1 per cent. In addition, yields of treasury bills also hovered around 15pc after hitting a 22-year high. As a result, the average daily turnover witnessed growth of 25.6 percent on a week-on-week basis to 282.1 million shares.

Other market-driving news stories during the week included the current account deficit swelling to $13 billion in the July-March period, nine-month IT exports increasing 29.3 percent to $1.9 billion, Finance Minister Miftah Ismail holding talks with key global investors, allocation of portfolios to six cabinet members and the nine-month fiscal deficit widening to Rs2.6 trillion or 4 percent of GDP.

“The week commenced in the green zone as investors welcomed better-than-expected corporate results along with a successful agreement with the IMF (International Monetary Fund) to extend the stalled bailout programme,” a report of Arif Habib Limited stated. However, the momentum could not be sustained amid concerns over further monetary tightening, given that Kibor touched a 13-year high, signalling another interest rate hike, it added.

“Next week, trading will take place for only one day, given the Eid holidays,” stated the report. “Once the market resumes trading, we believe stocks will take account of various key events next month such as monetary policy meeting and further update on technical-level talks with the IMF,” the report said, adding “the current visit of the prime minister to Saudi Arabia can also lead to some material announcements.”

During the week under review, average daily traded volume increased 14 percent on a week-on-week basis to 257 million shares, while average daily traded value declined 10 percent on a week-on-week basis to $36 million.

In terms of sectors, positive contributions came from commercial banks (84 points), fertilizer (61 points), chemical (45 points), automobile assemblers (8 points) and leather and tanneries (2 points).

On the flip side, sectors which contributed negatively included cement (117 points), technology and communication (99 points), oil and gas exploration (69 points), power generation and distribution (68 points) and engineering (33 points).

Foreign buying was witnessed during the week, which came in at $3.17 million as compared to net selling of $0.97 million in the previous week. Major buying was witnessed in technology and communication ($1.64 million) and textile composite ($1.01 million). On the local front, selling was reported by insurance companies ($6.71 million), followed by mutual funds ($4.87 million).