Daily Times

It was a good week for the Pakistan Stock Exchange (PSX) as the KSE-100 index rose 579 points to close at 41,630 points in spite of an economic downturn.

The KSE-100 index began the week on a good note, with bulls dominating the proceedings, indicating that investor sentiment at the exchange had improved.

After the IMF sent a draught of the Memorandum of Economic and Financial Policies (MEFP) to Pakistan, investors celebrated the progress made in negotiations between the two countries. Positive optimism was boosted by the $2.3b Chinese loan rollover.

As a result of investor apprehensions regarding the IMF lending program, the stock market was unable to maintain gains during the next two days. Investors remained on the sidelines due to the lack of positive catalysts.

End of the week, bulls regained control of the market after National Assembly approved the Rs9.6 trillion federal budget and continued strengthening of the Pakistani rupee resulting in a positive close on the last day of FY22.

To kick off FY23 on a good note, the KSE-100 index rose a few points on Friday as the bullish trend held firm.

When compared to the previous auction, Pakistan’s rupee continued to gain ground vs the US dollar, while cut-off rates on 3- and 6-month treasury bills declined by 2 basis points and 15 basis points, respectively. The average daily traded volume decreased by 34pc week-on-week, indicating a lack of activity in the market.

The Federal Board of Revenue (FBR) achieved its aim of collecting net revenue of Rs6.125 trillion in FY22, well ahead of the target of Rs6.10 trillion. In addition, the government raised petrol and diesel prices by Rs14.85 and Rs13.23 per litre due to the application of a petroleum levy, according to the analyst, in order to reach the income target for FY23 under the IMF program.

Due to a decrease in remittances, the external current account deficit for May 2022 increased by two times month-on-month. With a $2.3b loan from China, the Chinese central bank increased its reserves to $10b, according to Arif Habib Limited’s report.

On June 30, 2022, the rupee was trading at Rs204.85 to the US dollar.

IMF Memorandum of Economic and Financial Policies was also received by Pakistan, which indicated that the government was moving closer to a deal with the fund.

A number of revisions to Finance Bill 2022 were also adopted by the National Assembly, providing much-needed clarity to the market, especially in the banking industry. The second instalment of Rs96b was paid to the 2002 power policy’s independent power producers (IPPs).

However, the government’s economic actions (such as the increase in the price of motor spirit and high-speed diesel) to secure the IMF’s seventh and eighth reviews badly harmed the public mood.

Also in May 2022, the current account deficit widened to $1.4b, which had a negative impact on the overall outlook.

The stock market ended the week up 579 points (or 1.41pc) at 41,630. There was a favourable impact from cement (92 points), power (74) and E&P (69) as well as fertilizer (68 points) and banking (55 points). As a counterpoint, cable and electrical goods accounted for a negative six points each (4 points).

Stocks like Hub Power Company (83 points), Pakistan Oilfields (64 points), Lucky Cement (47 points), Engro Fertilizers (39 points), and Mari Petroleum (39 points) also contributed positively to the overall scoreboard (36 points).

However, Habib Bank (32 points), Engro Polymer and Chemicals (22 points), Oil and Gas Development Company (22 points), Kot Addu Power Company (13 points) and Dawood Hercules (13 points) contributed negatively (11 points).

Compared to the previous week’s net selling of $2.39m, $1.52m in foreign sales were made during the week under review. Fertilizer ($0.3m) and other industries ($0.2m) saw significant sales.

In terms of local purchases, banks came out on top ($6.8m), followed by individuals ($4.1m). The average volume of 199m shares (a decrease of 34pc from the previous week) and the average value of $30m were the results of this week’s trading (down 31pc WoW).