KARACHI: The Pakistan Stock Exchange (PSX) had a tumultuous trading week, but the benchmark KSE-100 index pushed through the 47,000-point threshold to conclude with a gain of 1,111 points, or 2.4 percent, in the previous week.
Investor activity was solid, and interest in cyclical and sideboard industries kept the market afloat. On the basis of a rising currency and clarity on the International Monetary Fund (IMF) policy, the index maintained a good pace.
Furthermore, sector-specific news sparked purchasing interest in some companies, fueling the rise even further. Four of the five sessions ended in positive territory, with the market closing at 47,295.80 points.
On Monday, the index rose over 900 points as investors regained interest after Shaukat Tarin, the Prime Minister’s Adviser on Finance and Revenue, confirmed that an agreement with the IMF on the revival of the $6 billion Extended Fund Facility (EFF) had been reached and that a formal agreement would be signed later this week.
The upward trend continued on Tuesday, with investors cheering the rupee’s steady strengthening versus the US dollar and strong increases in exports.
On Wednesday, however, the momentum shifted, and the market bowed to selling pressure in accordance with global equities markets. Furthermore, investors were obliged to trade carefully due to fears about monetary policy tightening at the impending Monetary Policy Committee (MPC) meeting on November 26.
Fortunately, the tables changed on Thursday, and the market ended the day in the black as investors flocked to the fertilizer, banking, and care sectors.
Despite bumpy trading, the market managed to maintain its bullish trend and ended the week with slight gains on Friday.
The good investment atmosphere was maintained by the publication of solid financial results in the banking, oil, and fertilizer industries, as well as anticipation of a probable clearance of the IMF tranche.
Other notable events this week included: foreign exchange reserves reaching $23.925 billion, Ufone signing Rs21 billion syndicated financing for 4G services, urea sales increasing by 10%, the Oil and Gas Regulatory Authority slashing local gas-producing firms’ sale price, and textile exports reaching a lifetime high of $6.04 billion from July to October.
Foreign selling resumed this week, with a net sale of $11.2 million compared to a net sell of $2.7 million the week before. Commercial banks ($5.6 million) and fertilizers ($1.4 million) also saw sales.
Other individuals ($14.5 million) and insurance firms ($6.5 million) made significant purchases in the United States.
The average volume traded during the period under review was 430 million shares (up 2.4 percent week over week), while the average value exchanged was $89 million (up by 121 percent week-on-week).
The week’s top gainers and losers
Technology (+490 points), fertilizer (+136 points), refinery (+115 points), oil marketing firms (+36 points), and textile composite (+33 points) all contributed positively to the sector, whereas textile weaving (-14 points) and paper and board contributed negatively (-9 points).
Systems Limited (+241 points), TRG Pakistan (+210 points), Meezan Bank (+72 points), National Refinery (+48 points), and Fauji Fertiliser (+41 points) were the top gainers by scrip. UBL (-38 points), Lucky Cement (-35 points), and HBL, on the other hand, were huge losers (-33 points).
Next week’s forecast
“We anticipate the market to stay bullish in the following week,” Arif Habib Limited projected in a report.
“With IMF and Pakistan expected to reach an agreement soon, the investor sentiment is anticipated to be upbeat,” it said, adding, however, that current macro-economic concerns such as higher inflationary reading due to jump in petroleum prices could keep the market range-bound.
“The KSE-100 is currently trading at a PER of 5.0x (2021) compared to Asia-Pacific regional average of 14.6x while offering a dividend yield of 8.4% versus 2.2% offered by the region,” the brokerage house stated.