KSE100: Bears engulfing during the week

News Desk

May 14, 2023

The Pakistani stock market closed lower on a weekly basis, down 1.8%. This was due to a number of factors, including:

The news that Pakistan is facing a substantial debt payment of $3.7 billion in the May-June 2023 period.
The fact that Pakistan was not on the agenda of the IMF meetings, which dampened hopes for the resumption of the Extended Fund Facility (EFF) program with the IMF.
Significant political developments during the week, including the arrest of former Prime Minister Imran Khan, which sparked protests across the country.
A decline in foreign exchange reserves held by the State Bank of Pakistan (SBP), which fell by $74 million to $4.38 billion.
A depreciation of the Pakistani rupee against the US dollar, which closed the week at 285.1/USD, down 0.53% week-on-week.

Sector-wise, the biggest negative contributors to the market were:

Oil & Gas Exploration Companies
Commercial Banks
Technology & Communication
Fertilizer
Cement

The sectors which contributed positively were:

Tobacco
Modaraba

Scrip-wise, the biggest negative contributors were:

SYS
HBL
OGDC
PPL
ENGRO

Scrip-wise, the biggest positive contributor was:

HMB

Foreigners were net buyers during the week, clocking in at $1.1 million compared to a net sell of $6.1 million last week. Major buying was witnessed in Banks ($0.8 million) and Food & Personal Care ($0.3 million). On the local front, selling was reported by Companies ($1.8 million) followed by Mutual Funds ($1.5 million).

Average volumes arrived at 133.5 million shares (down by 43% week-on-week) while the average value traded settled at $14.1 million (down by 50% week-on-week).

The Pakistani stock market is highly sensitive to political developments. This was evident in the recent market sell-off following the arrest of former Prime Minister Imran Khan. The market sentiment is likely to remain volatile until there is greater clarity on the political situation.

The IMF is also a major factor influencing the Pakistani stock market. The IMF has been providing financial assistance to Pakistan since the 1980s. The current IMF program is worth $6 billion and is scheduled to end in June 2023. The IMF has already delayed the review of the program twice due to concerns about Pakistan’s economic performance.

Any positive developments concerning the IMF would have a positive impact on the market sentiment and the overall performance of the index. This is because the IMF program is seen as a key source of foreign financing for Pakistan. Foreign investors are also likely to be more confident in investing in Pakistan if the IMF program is successfully completed.

In conclusion, the Pakistani stock market is heavily influenced by political and economic developments. Investors should carefully monitor these developments in order to make informed investment decisions.