Daily Times

A sluggish trading week on the Pakistan Stock Exchange was attributed to anxious investors unable to identify positive signals in the face of worsening macroeconomic statistics.

The dropping rupee versus the US dollar and the depletion of foreign exchange reserves kept investors at bay during the previous week’s trade. This dropped 1,354 points, or 3.02 percent, on the KSE-100 index to conclude the week at 43,486 points. Depleting foreign exchange reserves and the lack of clarity on the government’s intention of complying with the International Monetary Fund’s (IMF) demand for the restoration of the EFF is to blame, according to a study from Topline Securities. Investors’ confidence was further depressed by Saudi Arabia’s “lukewarm response” to a Pakistani delegation, which Saudi Arabia reportedly connected a $3 billion further support to the renewal of the IMF programme, according to the article.

A negative start to the week was had by everyone, as the benchmark KSE-100 index fell by about 1,448 points on the first day of trading in the new week. An investor exodus was noticed as a result of the continually worsening macroeconomic cues being witnessed. Although trading activity was range-bound, the following session did see some rebound. After the “bloodbath” of the previous day, investors were seen scouting for bargains in equities that had plummeted in price. A total of 111 points were added to the KSE-100 index as a result of this. This week’s rebound was stalled by skeptical investors looking for good signs in the midst of domestic political turmoil.

Due to the declining rupee, which was near its all-time lows, the benchmark index fell another 641 points on Tuesday. To add insult to injury, they continued to cherry-pick equities despite the fact that the local currency had dropped to an all-time low against the US dollar just the day before. The final two trading days of the previous week added a total of 623 points to the index, allowing it to regain some of its losses. This week’s economic measures should have a positive impact on the bourse’s sentiment, according to a report from Arif Habib Limited. It appears that the government plans to remove the subsidy on fuel and electricity to win IMF approval, which will be a positive sign for the market,” the report said, adding that “once the package comes through, other sources of foreign exchange should also open up,” including support from friendly states and the Asian Development Bank (ADB). The average daily traded volume increased by 13pc week-on-week to 274 million shares, while the average daily traded value increased by 21pc week-on-week to $43 million during the reviewed week.

Sugar and allied industries (9 points) and miscellaneous contributed positively to the overall score (1 point). There was a negative impact on the economy from industries such as banking (351; Cement 211; Fertilizers 179; Technology & Communication; Power Generation) (63 points). Pakistan Oilfields Limited (38 points), Millat Tractors (20 points), and Lotte Chemical Pakistan Limited were all positive stock contributors (11 points). However, Systems Limited (121 points), Lucky Cement (105 points), Habib Bank Limited (78 points), Engro Fertilizers (64 points), and United Bank Limited (121 points) all made negative contributions (64 points). There was $1.88 million in net foreign selling during the preceding week, compared to net foreign buying of $2.01 million in the five days prior to that. A total of $1.6 million was sold by commercial banks and $1.4 million by cement businesses. There was $16.3 million in local buying, followed by $1.5 million from other organizations. For example, urea off-take increased by 45 percent to 448,000 metric tonnes in April 2022, the Central Development Working Party (CDWP) approved four projects worth Rs136.74 billion, Systems Limited agreed to acquire NdcTech, Pak Suzuki Motor increased vehicle prices once more, and 250 basis points raised the profit rates at National Savings. On the heels of value-hunting in attractive companies and news of the highest-ever remittances in April 2022, the last two trading days have seen some recovery. Investors’ interest was resurrected by the record remittances, as they had been expecting some good news on the economic front.