CARACHI:

The Pakistan Stock Exchange suffered a lackluster week of trading as jittery investors weighed the impact of growing political unrest in the country coupled with the continued depreciation of the rupee.

Subsequently, the benchmark KSE-100 closed the week with a loss of 1,998 points to 40,077.

The week started on a negative note as skeptical investors rushed to unload their holdings. Investor interest remained subdued as political uncertainty gripped the stock market.

In addition, the persistent fall of the rupee against the US dollar, which reached a new high at 228.37 rupees in the interbank market, prevented investors from taking new positions.

Market talk suggests that the rupee recorded the biggest decline this week after 1998.

However, the stock market took a breather on Wednesday and rallied slightly, but it failed to maintain the uptrend and failed to respond to market fears of a rapid rise in inflation.

The stock market remained under selling pressure as it witnessed a steady depreciation of the rupiah, which dragged the index below 40,000 points.

However, value buying took the KSE-100 index above the 40,000 mark on Friday after a lackluster trading session on political uncertainty and inflationary concerns with a sharp decline in the value of the rupee.

The index failed to end the week in the green as it came in at 40,077, down 1,998 points week-on-week.

“The delay in IMF program clarity and political uncertainty following the Punjab by-elections weighed on the equity market, sending the benchmark down 1,998 points to 40,077,” the analyst said. by JS Global, Muhammad Waqas Ghani. Negative sentiment was fueled by the steady depreciation of the Pakistani rupee against the greenback, which closed at an all-time low of 228.37 (down 23% CYTD).

Market participation fell during the week, with average volumes down 8% week-over-week, while value traded fell 31% week-over-week, added the analyst.

Individuals remained the top buyers with net purchases of $5 million. In contrast, mutual funds remained net sellers, offloading $7.6 million worth of stocks.

The engineering (-8.2%), refinery (-8.1%), cement (-7.3%) and WTO (-6.6%) sectors were among the main underperformers of the week.

Elsewhere, Fitch lowered its credit outlook on Pakistan to negative after Moody’s downgraded the country’s rating last month.

Finance Minister Miftah Ismail held a press briefing during the week to control the damage and assured that the government will soon be able to manage a $4 billion funding shortfall with the help of countries friends and that the IMF program was on the right track.

Moreover, according to data released by the State Bank, foreign exchange reserves fell by 4% on a weekly basis, the analyst said.

Arif Habib Limited in its report said political uncertainty weighed on the market during the week.

The Pakistani Rupee continued to depreciate over the week, hitting an all-time low of Rs228.37 amid depleted foreign exchange reserves and uncertainty over funding from friendly countries.

Additionally, the IMF is assessing which friendly countries are willing to provide financial assistance to Pakistan before disbursing the $1.2 billion loan.

Given the situation, the pressure was felt on the market, bringing the index below 40,000 points.

On top of that, Fitch downgraded Pakistan’s rating outlook to negative. However, a slight rebound was seen on the last trading day.

The market closed at 40,077 points, losing 1,998 points (down 4.75%) week-over-week.

In terms of sectors, the positive contribution came from Sugar and Allied Industries (3 points) and Close-End Mutual Fund (2 points).

On the other hand, the sectors that contributed negatively are commercial banks (499 points), fertilizers (294 points), cement (245 points), oil and gas exploration companies (187 points) and production and electricity distribution (110 points).

Meanwhile, positive equity contributors were Shakarganj Limited (3 points), HBL Growth Fund (2 points), Highnoon Laboratories (2 points), Murree Brewery Company (1 point) and Dolmen City REIT (1 point). ).

However, the negative contribution came from Habib Bank (152 points), Lucky Cement (92 points), Engro Corporation (92 points), Engro Polymer and Chemicals (91 points) and Hub Power Company (90 points).

Foreign purchases were seen this week, reaching $3.43 million, compared to a net purchase of $1.40 million last week. Large purchases were seen in technology ($1.98 million) and all other sectors ($0.75 million).

On the local front, sales were led by mutual funds ($7.76 million), followed by insurance companies ($2.22 million).

Average volumes reached 163 million shares (down 8% WoW) while the average traded value was $21 million (down 31% WoW).­­

Published in The Express Tribune, July 24e2022.

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