In a record spree, the Pakistan Stock Exchange (PSX) touched a new high above the 55,000 mark in the past week as investors built up long positions in attractive sectors in anticipation of a favorable outcome of first-rate talks with the International Monetary Fund ( IMF).
Market players also took cue from falling bond yields and marked improvement in remittances sent home by overseas Pakistanis. Declining global crude oil prices helped lift the market to the north.
Banking, energy, fertilizer, exploration and production (E&P) and auto sectors were at the center where investors bought lucrative stocks to build their portfolio.
Meanwhile, average trading volume improved significantly, indicating widespread interest in the market.
Earlier in the week, the stock market extended its record in a rally boosted by strong corporate results and talks between Pakistan and the IMF under the first revision of the $3 billion standby agreement.
However, the next day the market came under pressure amid a falling rupee and political uncertainty, ending a six-day winning streak.
On Wednesday, the PSX bounced back from a short-lived decline to soar to a new record high as investors awaited a positive outcome of talks with the IMF and $600 million in loans from China to bridge the funding gap.
After being closed on Thursday due to Iqbal Day, the market on Friday soared to a fresh record high of over 55,000 amid technical review talks with the IMF, a cut in bond yields and a rise in remittances.
The benchmark KSE-100 rose 2,268 points, or 4.3% week-on-week (WoW), to end the week at 55,391.
JS Global analyst Muhammad Waqas Ghani, in his market overview, wrote that the KSE-100 extended its bullish momentum to hit new highs and ended the week at 55,391, up 4.3% WoW. Average daily volume was 544 million shares, up 21% WoW.
He pointed out that the focus was on the discussions between the government and the IMF. On fiscal issues, the IMF and the Federal Board of Revenue discussed structural adjustments to tax collection, including the introduction of taxes in the agriculture, real estate and retail sectors.
In the energy sector, the IMF expressed concerns over the delay in the notification of the increase in natural gas tariffs. Specifically, the Oil and Gas Regulatory Authority (Ogra) has finally announced the increase in tariffs by 20-150% for residential consumers and 5-193% for industries, with effect from November 1, 2023, he said.
In the Pakistan Investment Bonds (PIBs) auction, cut-off yields were cut by as much as 180 basis points. During the week, international oil prices (West Texas Intermediate crude) fell below 80 dollars a barrel due to a decrease in demand from the US and China.
In other economic news, remittance inflows rose 10% year-on-year to $2.46 billion in October 2023, the highest for seven months, the JS analyst added.
Arif Habib Limited, in its report, said that the stock market has reached a major milestone, crossing 55,000 points. “The market continued its uptrend, fueled by the first revision talks with the IMF, which were expected to move smoothly,” it said.
Ogra announced a substantial increase in natural gas prices, an imperative condition for the IMF review. During the week, the Pakistan Rupee closed at Rs 287.03 against the dollar, depreciating by Rs 2.7 or 0.95% WoW.
Foreigners became buyers as they bought $1.3 million worth of shares compared to net selling of $1.4 million last week. Major purchases were made in banks ($1.4 million) and power companies ($1.2 million).
Overall, the sectors that contributed positively to the index were commercial banks (447 points), cement (409 points), fertilizers (362 points), power generation and distribution (345 points) and E&P (147 points).
Published in The Express Tribune, November 12u2023.
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