KARACHI: After closing in the green with a gain of 60 points (0.13 percent) during the rollover week, the Pakistan Stock Exchange (PSX) is likely to rally in the week starting today (Monday) on the back of the International Monetary Fund (IMF) executive board meeting scheduled for Wednesday as well as ongoing result season.
The IMF board is expected to revive the Pakistan programme, which will certainly have a positive impact on the market. The government has met all key conditions of the IMF, with the last one fulfilled with the passage of the State Bank of Pakistan (Amendment) Bill, 2021 from the parliament. If the IMF board meeting clears the review, it will bode well not only for the national economy but also for the bourse.
However, the surging crude oil prices, geopolitical situation, Russia-Ukraine tension, and increasing number of the Omicron cases in the country may dent the investors’ confidence.
The PSX started last week on a negative note and the benchmark KSE-100 Index shed 94.37 points on Monday as investors were worried about a hike in the policy rate by the central bank. Though the market hailed the central bank’s decision to keep the interest rate unchanged, it shed 36.14 points on Tuesday too. The main reasons behind the fall were a rise of international oil prices to a seven-year high as well as the rollover week.
On Wednesday and Thursday, the market gained 67.28 points and 127.99 points respectively, as cut-off yields in the treasury-bill auction significantly declined which were in accordance with the latest monetary policy announcement. The sentiment was further fuelled as SBP Governor Dr Reza Baqir showed confidence over the revival of the $6 billion extended fund facility of the International Monetary Fund.
On the last day of the week, the stock market welcomed the legislation on the central bank’s autonomy, which will result in the disbursement of $1 billion after getting the final nod of approval from the IMF’s executive board in its meeting. As a result, the benchmark index closed at 45,078 points after gaining 60 points on a week-on-week basis.
During the week under review, foreign selling remained $4 million against a net sell of $2.09 million in the preceding week. Selling was witnessed in technology and communication ($2.4 million), cement ($1.3 million) and other sectors. On the domestic front, major buying was reported by companies ($19.5 million), followed by mutual funds ($4.8 million).
Average volumes clocked in at 187 million shares, which remained 7 percent lower on a week-on-week, while average value traded settled at $38 million (down by 9% WoW).
Sector-wise positive contributions came from cement (+55 points), power generation and distribution (+45 points), food and personal care products (+30 points), fertilizer (+26 points), and commercial banks (+24 points), while sectors contributing negatively included technology and communication (-52 points), oil and gas exploration companies (-50 points) and automobile assemblers (-14 points).
According to experts, the meeting of the IMF’s executive board on February 2 may provide the much-needed trigger to the stock market. It’ll invite back the bulls to re-rate the extremely low valuations, it added. “We expect the market to ignore the oil rally for now as the positive news flow ahead calls for going long in the market,” they added.
