Interest rate decision & IMF talks take the market 1.49pc down

KARACHI: Pakistan Stock Exchange (PSX) snapped a three-week winning streak amid dampening hopes for an interest rate cut and ongoing talks with the International Monetary Fund (IMF) for the last review of $3 billion stand-by arrangement (SBA), with the benchmark KSE-100 Index losing 977.29 points (-1.49 percent) to close the week at 64,816.46 points.
The IMF and Islamabad started five-day talks on Thursday, which will continue till Monday. The negotiations have raised concerns among investors regarding the stringent measures the Fund may require. Moreover, investors are waiting for the upcoming monetary policy decision on March 18, wherein the market is somewhat divided on the appropriate action from the State Bank of Pakistan.
During the week under review, the bourse underwent a bearish spell by closing four out of five sessions in the red. The PSX lost 38 points on Monday in mixed trading, as the benchmark index breached the 66,000 points level during intra-day before closing in the red. The KSE-100 index fell sharply on Tuesday and Wednesday, losing over 1,700 points with multiple factors including the weak rupee, monetary policy uncertainty, high inflation and the imminent IMF review denting investor sentiment.
The market bounced back and gained 1,015 points on Thursday amid value-hunting as investors cherry-picked holdings. The investor confidence returned over the finance ministry’s assurance of Pakistan being in a good shape to successfully complete the SBA and secure a longer-term loan programme. However, the trend reversed on Friday when investors opted to book profits and stood on sidelines over economic concerns.
The market turnover saw a significant fall during the week largely due to Ramazan’s shorter trading sessions. The KSE-100’s average daily traded volumes decreased to 148 million shares, worth Rs6.35 billion, marking a decrease of over 25 percent on a month-on-month in the number of shares and 41 percent MoM in traded value. Moreover, the overall PSX average traded volume was recorded at 339 million shares, worth Rs11.45 billion, marking a decrease of 20 percent MoM in the number of shares and 30 percent MoM in traded value.
Foreign investors remained net buyers by acquiring $2.66 million worth of equities during the week under review. Flow-wise, foreign corporations were the dominant buyers, with a net investment of $4.25 million. On the other hand, the leading sellers were companies, with a net sale of $2.52 million.
The Pakistani rupee recorded a gain of 0.11 percent WoW against USD. On the macroeconomic front, cut-off yields on Pakistan Investment Bonds (PIBs) remained unchanged compared to the previous auction, with three, five and 10-year yields standing at 16.8%, 15.5% and 14.35%, respectively. Moreover, the State Bank’s reserves remained stable at $7.9 billion.
In terms of sectors, positive contributions came from automobile parts (20 points), paper and board (6 points), and chemicals (4 points). Negative contributors were investment banks/ investment companies/ securities companies (216 points), fertilizer (215 points), oil and gas exploration (190 points), commercial banks (174 points), oil and gas marketing companies (103 points) and Power generation & distribution companies (55 points).
The worst-performing stocks during the week which deprived the index of points remained DAWH (203 points), OGDC (108 points), ENGRO (78 points), BAHL (68 points), and UBL (68 points). The stocks adding points to the index remained MEBL (62 points), EFERT (52 points), LUCK (47 points), THALL (20 points), and PTC (18 points). – TLTP