The Pakistan Stock Exchange (PSX) succumbed to selling pressure in the previous week, closing with a loss of 745 points, or 1.63 percent, to settle at 45,018.28 points, after six weeks of closing in the green.
“The market has been under pressure all week, with the biggest drop on Thursday,” JS Global analyst Wasil Zaman said.
The week began on a bearish note, as jittery investors chose to stay away from the market due to rising COVID-19 cases in the country.
The downturn persisted for the following three days, as a lack of positive triggers, as well as the rupee’s devaluation against the US dollar amid rising crude oil and commodities prices, to the misery of investors who chose to remain on the sidelines.
Furthermore, market participants remained cautious throughout the week in anticipation of Monday’s monetary policy announcement.
Fortunately, the bulls returned to the bourse on Friday, the last day of the trading week, following an upward revision in Pakistan’s economic growth rate for the previous fiscal year due to rebasing.
It’s worth noting that from the fiscal year 2005-06 to 2015-16, the government rebased the economy, which increased the size of the economy, boosted growth, and reduced the public debt.
The Federal Board of Revenue (FBR) declared a 17 percent sales tax on commodities, the zero-rating of sales taxes was lifted, foreign reserves declined by $562 million, K-E urged NEPRA to refund customers Re0.67 per unit of energy, and Pakistan Suzuki boosted automobile pricing due to the “mini-budget.”
Meanwhile, foreign selling totaled $2.09 million this week, compared to a net purchase of $0.53 million the week before. Oil marketing firms ($1.4 million) and technology and communication ($1 million) also had sales.
Individuals ($12.4 million) were the biggest buyers in the domestic market, followed by banks ($5.9 million).
The average volume traded during the week under review was 201 million shares, down 43% from the previous week, and the average value traded was $42 million (down by 17 percent week-on-week).
Week’s top gainers and losers
Technology and communication (-241 points), commercial banks (-96 points), cement (-69 points), refinery (-65 points), and fertiliser (-65 points) all had negative contributions (-63 points). On the other hand, oil and gas exploration companies (+36 points), power generation and distribution (+7 points), and real estate investment (+6 points) all made positive contributions.
TRG Pakistan (-239 points), Energy Pakistan Limited (-31 points), MCB (-23 points), Dawood Hercules Corporation (-22 points), and Pakistan State Oil (-22 points) were the main scrip losers (-21 points). Meanwhile, Kot Addu Power Company (+30 points), Mari Petroleum (+24 points), and BAHL (+23 points) were the top gainers.
Next week’s forecast
“Investors should be cautious in the next week as the Monetary Policy Committee (MPC) meets, while inflationary pressure is anticipated to build in the background of rising commodity prices,” according to a study from Arif Habib Limited.
“Moreover, on January 28, negotiations with the International Monetary Fund (IMF) are anticipated to restart, which might have a beneficial influence on the market,” it said.
The brokerage business added, “The KSE-100 is now trading at a PER of 5.1x (2022) compared to the Asia-Pacific regional average of 13.9x while delivering a dividend yield of 8.7% vs the region’s 2.3 percent.”