KARACHI:
Turmoil and uncertainty marked the outgoing week on the Pakistan Stock Exchange (PSX), as the market suffered a bearish spell closing four out of five sessions in the red.
Uncertainty over securing a new, longer-term loan package in negotiations with the International Monetary Fund (IMF) kept the KSE-100 index under constant pressure.
The week started on a strong note as increasing selling pressure in select stocks and a weak economic outlook kept investors away on Monday.
The KSE-100 index fell sharply on Tuesday, losing over 950 points as several factors including a weak rupiah, monetary policy uncertainty, high inflation and the looming IMF review weighed on investor sentiment.
The looming monetary policy announcement discouraged investors, who had otherwise been positive about the IMF’s review of the $3 billion standby arrangement (SBA), which fueled bearish sentiment and the index fell another 750 points on Wednesday.
The market rebounded on Thursday, jumping over 1,000 points as investor confidence returned on the finance ministry’s assurance that Pakistan is in a good position to successfully complete the SBA and secure a long-term loan program. However, the trend reversed in the next session when investors chose to lock in profits and remained on the sidelines due to economic concerns.
Amid all the gloom, the KSE-100 lost 977 points, or 1.5% week-on-week (WoW), to settle at 64,816.
JS Research analyst Shagufta Irshad, in her report, said the stock market witnessed high volatility throughout the week, closing in the negative for four out of five trading days.
Reading: The PSX retreats on the interest rate, the revision of the IMF uncertainty
Average trading volume shrank by 20% WoW, which depicted reduced market activity as Ramazan began, he added.
New ministers taking office and the subsequent arrival of an IMF delegation for the final review of the $3 billion SBA were the highlights of the week.
The newly elected government remained quite stable in meeting all structural benchmarks, quantitative and indicative targets set by the IMF. The IMF team reportedly expressed some concern over the government’s upcoming strategies to address the expected revenue shortfall in 4Q14 and reduce cyclical debt in the energy sector. It is worth noting that the evaluation report will be submitted to the IMF’s executive committee by the second week of April for approval of a $1.1 billion tranche.
On the macro front, Pakistan Investment Bond (PIB) cut-off yields remained unchanged from the previous auction, with the three-year, five-year and 10-year yields standing at 16.8%, 15.5% and 14.35%. respectively. In addition, the state bank’s reserves remained steady at $7.9 billion, the JS analyst added.
Arif Habib Limited (AHL) wrote in its report that the stock market remained under pressure throughout the week, mainly due to divided views on the upcoming monetary policy, alongside negotiations with the IMF on a final revision of the SBA.
At the same time, the formation of the cabinet and the appointment of Muhammad Aurangzeb as finance minister raised the long-standing uncertainties.
On the financial front, the government raised Rs93 billion against a target of Rs50 billion through the Ijarah Sukuk auction, while broad money (M2) increased by Rs496 billion to Rs32.7 trillion. In addition, the rupee appreciated slightly to close at 278.74 against the US dollar, a WoW increase of Rs 0.29, or 0.11%.
In terms of sectors, positive contributions came from auto parts (20 units), paper and board (6 units) and chemicals (4 units). Negative contributors were fertilizers (215 points), oil and gas exploration (190 points), commercial banks (174 points), oil and gas trading companies (103 points) and energy (55 points).
Foreign investor purchases continued during the week under review, amounting to $2.7 million compared to last week’s net purchase of $6.3 million, AHL added.
Published in The Express Tribune, March 17u2024.
Like Businesses on Facebook, be followed @TribuneBiz on Twitter to stay updated and join the conversation.
a href=”https://tribune.com.pk/story/2459573/psx-under-pressure-over-imf-talk-concerns”>Source link
