KARACHI: The Pakistan Stock Exchange (PSX) gained ground in the previous futures rollover week, boosted by Saudi assistance. In the week under review, the KSE-100 index increased 606 points, or 1.3 percent, to 46,184.71.
The bourse’s optimistic attitude was spurred by a drop in COVID-19 cases, as well as strong economic statistics and prospects for ongoing discussions with the International Monetary Fund (IMF).
Technical concerns with the newly acquired Chinese trading system hampered the market’s advances, but overall confidence at the local exchange improved as investors remained unfazed by the political uncertainty.
The week began on a sour note, as investors were concerned about the result of Pakistan’s discussions with the IMF. The negative sentiment persisted as the rupee continued to depreciate against the US dollar, shattering investor confidence to an all-time low of Rs175.27 on Tuesday.
On Wednesday, however, the trend shifted as the Saudi Fund for Development announced a $3 billion deposit with the State Bank of Pakistan (SBP) to help maintain foreign exchange reserves.
Despite some technical issues in the newly acquired Chinese trading system, the market maintained a strong trend until the last session.
The market was closed from 12 p.m. to 2:30 p.m. on Wednesday. Although operations were restarted at 2:35 p.m., the system became unusable again in the final 30 minutes (between 3:30 and 4:00 p.m.) before the market closed.
Despite the instability, investor engagement on the stock exchange increased, and rampant cherry-picking in various industries led to a surge. Share prices were at favourable levels thanks to the recent drop, motivating market players to take new holdings.
On the final session of the rollover week, encouraging corporate results and a reversal in the rupee-dollar parity pushed the benchmark KSE-100 index past the 46,000-point level.
The central bank’s forex reserves fell to $23.933 billion this week, Pakistan planned to issue dollar Sukuk in two months, circular debt reached Rs2.294 trillion in July-August, total foreign loans reached $3.2 billion in July-September, CDWP put Rs345.62 billion projects on the ECNEC table, the government said it would receive Rs60 billion in gas development surcharges from private plants, and the Phase-III Thar coal mining expansion project was approved.
Foreign selling resumed this week, with a net sale of $2.7 million compared to a net sell of $7.3 million the week before. Commercial banks ($2.5 million) and fertilisers ($1.7 million) also saw sales.
On the home front, other organisations ($1.7 million) and insurance firms ($1.3 million) made significant purchases. The average volume moved during the week under review was 203 million shares, down 32% from the previous week, while the average value transacted was $40 million (down by 37 percent week-on-week).
The week’s top gainers and losers
According to a survey by JS Global, engineering (+8.9%), cement (+7.6%), cars (+3%), oil and gas marketing businesses (+1.5%), chemical (+1.4%), and electricity (+1.4%) contributed positively, while refinery (-2.9%), exploration and production (-1%) and banking (-1%) contributed negatively (-0.8 percent ).
Mughal Iron and Steel (+16.8%), Packages Limited (+14.6%), Shifa International Hospitals (+12.5%), Shakarganj Limited (+12.4%), and Pioneer Cement (+10.8%) were among the top scrip gainers. On the other hand, significant losers were Searle (-22%), Lotte Chemical (-8.3%), and Avanceon (-8.3%). (-7.6 percent ).
Next week’s forecast
“We expect the market to exhibit positive in the next week due to the conclusion of discussions with the IMF for the sixth tranche,” according to a study from Arif Habib Limited.
“Moreover, Saudi Arabia’s support in terms of safe deposits, the IMF tranche, and the upcoming Sukuk issue (expected to raise $1,000 million) will relieve pressure on the country’s foreign exchange reserves,” it said, adding that current macro-economic concerns such as rising imports and higher CPI inflation could keep the market range-bound.
The brokerage business noted, “The KSE-100 is now trading at a PER of 5.3x (2021) compared to the Asia-Pacific regional average of 14.6x, while giving a dividend yield of 8.1 percent vs the region’s 2.2 percent.”