Stocks dropped for a second straight week last week, as KSE100 shed 1.2% during the last week. The decline still left investors looking at significant gains so far in 2021, with the KSE100 still up by more than 2,000 points since December-2020.
Lately, many news flows have impacted the Stock market including Afghanistan situation, Rising Current Account Deficit, Depreciating Rupee and Unceremonious departure of New Zealand Cricket Team hinting of Changing Geo-Politics in the region.
The situation remain fluid for the market and there are various news flows, Investors are wary off. Few of them are listed below:
Monetary Policy Announcement
While analysts believe that SBP is likely to maintain the Interest Rates, few remain cautious as Economy is now giving room for slight upward adjustment in the Monetary stance. Economic Indicators (Current Account, LSM) shows that economy has peaked up for now and need some preemptive measure to reign in the deficits.
Some analyst believe that SBP will increase the Interest Rates by 0.25%, signifying the Expansionary Monetary Stance is over and economy to curtail going onwards.
With he recategorization of Pakistan into Frontier Market, There are Inflows and Outflows expected from the market. However, timing may vary and will differ for certain stocks. Some blue chip stocks have already taken the battering (HBL, LUCK, OGDC) while analyst believe that further selling may be witnessed.
Overall it is pertinent to monitor the Stock Wise and Sector wise flows to ascertain the direction
As Afghanistan falls in economic quagmire, the situation is becoming tense on daily basis. Afghan Banks are running out of reserves and economy has started shattering. Unless foreign Aid arrives, Pakistan is going to get impacted as Afghanistan is economically tied with Pakistan.
With Sensitive Price Index showing no sign of respite, CPI inflation for the month of September is expected around 8% showing elevated levels. Untamed inflation is likely to dampen Investors confidence.
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