The stock market ends its three-week rally and falls 679 points

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An investor can be seen talking on the phone in the main hall of the Pakistan Stock Exchange (PSX). — AFP/File
  • Concerns over the IMF meeting keep the market under pressure.
  • The KSE-100 closes the week at 42,592 points.
  • AHL expects the market to be positive over the coming week.

KARACHI: The Pakistan Stock Exchange (PSX) endured a relatively volatile week as the winning streak of the past three weeks came to an end. The stock market lost 679 points or 1.57% over the past week and stabilized at 42,592 points as external woes and rapidly depleting foreign exchange reserves kept the benchmark under pressure.

The week started on a negative note as stocks came under massive selling pressure with more than 400 points erased on the first day of the rolling week as market participants refrained from taking new positions ahead of the monetary policy announcement.

The roles have turned and the the market recorded gains on Tuesday following improved investor sentiment following the decision of the State Bank of Pakistan (SBP) to maintain a policy rate status quo for the next seven weeks. In addition, Qatar’s announcement regarding its $3 billion aid to Pakistan sparked a bullish trend in the market.

PSX Weekly Review: Stock Market Ends Three-Week Rally, Falls 679 Points

However, a dramatic turn of events was seen as the bears reigned supreme again on Wednesday as the euphoria over entries from Qatar and Saudi Arabia died out and investors dumped overbought stocks. With no apparent change ahead of the International Monetary Fund (IMF) board meeting scheduled for August 29, concerns about the economic situation added to the gloom and the market remained in the zone. red until end of rolling week.

Other major developments during the week were: Current account deficit in July was down 45% month-over-month to $1.21 billion, the rupee lost more than Rs6 against the US dollar during the week, SBP Reserves fell $87m to $7.8bn Pakistan Oilfields found hydrocarbons at Tolanj West-2 in Khyber Pakhtunkhwa Asian Development Bank approved $0.7m technical assistance of dollars, international institutions announced aid of 500 million dollars for the floods, foreign direct investments fell to 59 million dollars in July, and Rs36 billion cigarette tax.

Meanwhile, overseas sales continued this week, hitting $1.9 million from a net sale of $2.8 million recorded last week. The sell-off was seen in commercial banking ($3.7 million) and exploration and production ($0.7 million).

On the domestic front, large purchases were reported by banks and development finance institutions ($4.1 million), followed by individuals ($3.8 million).

During the week under review, average volumes reached 250 million shares (down 52% week-on-week), while the average value traded was $37 million ( down 35% over one week).

Top winners and losers of the week

Negative sector contributions came from Banks (-143 points), Miscellaneous (-138 points), Energy (-101 points), Petroleum Marketing Companies (-80 points) and Chemicals (-59 points). ).

On the other hand, the positive contributions came from fertilizers (+70 points) and cement (+28 points).

The main losers in terms of certificates were Pakistan Services (-137 points), Hubco (-104 points), Pakistan State Oil (-79 points), HBL (-48 points) and TRG Pakistan (-48 points).

Meanwhile, the main gainers were Lucky Cement (+75 points), Systems Limited (+75 points), TGL (+26 points), Fauji Fertilizer (+25 points) and Pakistan Oilfields (+19 points).

Outlook for next week

A report by Arif Habib Limited said that with IMF and Pakistan meetings scheduled for next week, it is expected that the IMF will approve the $1.17 billion tranche allowing for disbursement by a week approximately.

“Bearing in mind the current earnings season, certain sectors and certificates should remain in the spotlight,” he said, predicting the market should be positive over the coming week.

“The KSE-100 is currently trading at a PER of 4.2x (2022) compared to the Asia-Pacific regional average of 12.7x while offering a dividend yield of 9.6% against 2.7% offered by the region,” the brokerage said.

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