KARACHI: Pakistan Stock Exchange (PSX) maintained its losing streak for the third week in a row amid inflation outlook as well as economic and political instability, with the benchmark KSE-100 Index shedding 547.28 points (-1.14 percent) on a week-on-week basis to close at 47,671.21 points.
The benchmark KSE-100 Index shed 205.91 points (-0.43 percent) and 161.31 points (-0.33 percent) in the preceding two weeks after surging for four straight weeks. Overall, the index gained 3,464.24 points during the last seven weeks. The KSE-100 Index has gained 6,218.23 points since the Staff Level Agreement (SLA) was signed with the International Monetary Fund (IMF) on June 30.
During the last week, the trading commenced on a negative note on Monday when it slumped over 700 points following President Arif Alvi’s statement regarding his refusal to sign the Pakistan Army and Official Secrets Bills. The downtrend persisted on Tuesday as well with investors remaining under pressure over continuous free fall of the rupee that touched an all-time low, expected hike in the key policy rate and concerns over dismal data showing a $809 million current account deficit.
Factors such as rupee fluctuation and a rising power tariff that impacted the economy kept investors on the sidelines, who opted for cautious trading on Wednesday and the market closed flat.
On Thursday, the KSE-100 index broke its losing streak after four days of losses as investors were buoyed by virtual talks between Pakistan and the International Monetary Fund (IMF) over the energy sector. The optimism, however, could not be sustained and the index fell on Friday, driven by negative cues like inflation, rising power tariff and persistent rupee fall, which aggravated the bearish mood of investors.
The Pakistani rupee continued losing ground against the US dollar for the fourth week in a row, depreciating by 1.76 percent in the interbank market, 3.92 percent in open market and 3.75 percent in the black market/ Hundi. The rupee depreciated in all five sessions of the week and set four consecutive all-time new lows against the dollar during the last four sessions.
According to JS Global analyst Muhammad Waqas Ghani, the week commenced on a pessimistic tone and the unfavourable momentum continued as investors opted to lock in profits due to uncertainty on both the political and economic fronts. Furthermore, the State Bank’s foreign currency reserves dipped by $125 million to $7.9 billion on account of debt repayments, he added.
Arif Habib Limited, in its report, said that the bourse experienced a mixed trend during the week because of various developments on the political and economic fronts.
Pakistan’s current account deficit for July 2023 amounted to $809 million, showing a significant 36 percent year-on-year decrease. In July 2022, the deficit had reached $1.26 billion. Furthermore, the government raised over Rs2.1 trillion through the auction of T-bills. Pakistan also received $6.49 billion through the Roshan Digital Account (RDA) but the State Bank’s reserves decreased by $125 million, reaching $7.9 billion.
In terms of sectors, positive contributions came from commercial banks (19 points) and oil and gas exploration companies (15 points). Negative contributions came from fertilizer (92 points), food and personal care products (80 points), cement (79 points), technology and communication (71 points) and pharmaceuticals (41 points).
Foreigners were once again the net buyers, who bought shares worth $1.7 million as compared to net buying of $2.4 million last week.
The anticipation of heightened inflation had a negative impact on the market, fearing an ad hoc policy rate hike. However, the recent T-bill auction negated that sentiment, with yields largely maintaining their flat trend as compared to the previous auction. Now the focus is on September 2023 CPI data and the Monetary Policy Committee meeting scheduled for September 14, 2023.
