KARACHI: Investors sentiments at Pakistan Stock Exchange (PSX) remained negative during the outgoing week ended on July 22, 2022 on the back of political and economic uncertainty in the country.
The benchmark KSE-100 index declined by 1,998 points or 4.7 percent week-on-week basis and closed at 40,077 points at the end of the last week compared to 42,075 points a week earlier.
Trading activity at ready counter was thin as average daily volumes on ready counter decreased by 8 percent to 163.39 million shares as compared to previous week’s average of 177.60 million shares. Average daily traded value on the ready counter also dropped by 26.4 percent to Rs 4.73 billion against previous week’s Rs 6.43 billion. Total market capitalization stood at Rs 6.754 trillion, down by Rs 290 billion during the last week.
BRIndex100 lost 235.49 points during this week to close at 3,953 points with average daily turnover of 146 million shares.
BRIndex30 also decreased by 1,003.27 points on a week-on-week basis to close at 14,375.57 points with average daily trading volumes of 106 million shares.
Analysts at JS Research said that delay in clarity over the IMF program and political uncertainty introduced after the by-elections in Punjab took a toll on the equity markets taking benchmark index down to 40,077 level.
Negative sentiments were fueled by consistent depreciation of Pak Rupee against the greenback, closing at its all-time low of 229 this week (-23 percent CYTD). Market participation witnessed a drop this week as average volumes also decreased.
Individuals remained key buyers with net buying of $5 million. On the other hand, Mutual Funds remained net sellers offloading $7.6 million worth of equities. Engineering (-8.2%), Refinery (-8.1%), Cement (-7.3%) and OMC (-6.6%) sectors were among the major underperformers during the week. In other news, Fitch also downgraded its outlook on Pakistan to negative following Moody’s, which had demoted the country last month.
On the other hand, Finance Minister Miftah Ismail conducted a press briefing during the week to control damage and assured that the government would be able to manage the funding gap of $4 billion soon with the help of friendly countries and that the IMF program is on track. Moreover, according to data released by SBP, foreign exchange reserves decreased 4% on a weekly basis.
According to AHL Research, political uncertainty took a toll on the market during the last week. The Pak Rupee continued to depreciate and uncertainty prevailed over funding from friendly countries. Given the situation, the pressure was felt by the market, taking the index below 40,000 points.
Sector-wise negative contributions came from Commercial Banks (499pts), Fertilizer (294pts), Cement (245pts), Oil & Gas Exploration Companies (187pts) and Power Generation & Distribution (110pts).
Whereas, sectors which contributed positively were Sugar & Allied Industries (3pts) and Close-End Mutual Fund (2pts). Scrip-wise negative contributors were HBL (152pts), LUCK (92pts), ENGRO (92pts), EPCL (91pts) and HUBC (90pts). Meanwhile, scrip-wise positive contributions came from SML (3pts), HGFA (2pts), HINOON (2pts), MUREB (1pts) and DCR (1pts).
Foreign buying was witnessed this week, clocking in at $ 3.43 million compared to a net buy of $1.40 million last week. Major buying was witnessed in Technology $ 1.98 million and all other sectors $0.75 million.
Analysts at Topline said that last week’s decline in market can be attributed to increase in political uncertainty following the Punjab by-election where opposition party PTI gained majority of the seats and is now in a position to form government in the province. This has resulted in increased vigor in PTI`s call for early election at an all-important time when the government has to fulfill IMF precondition before the IMF executive board meeting, they added.
Other major events during the outgoing week were remittance number for June-22 clocking in at $2.7 billion (up by 18 percent MoM and 2 percent YoY), LSM number for May-22 coming in at 21.4 percent YoY higher and Fitch Ratings downgraded Pakistan’s outlook to negative from stable citing political risks.
Copyright Business Recorder, 2022