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PSX review: KSE-100 inches down 163 points in lacklustre week

PSX review: KSE-100 inches down 163 points in lacklustre week
— Reuters/File
— Reuters/File
  • PSX witnesses a tepid week as concerns over upcoming monetary policy announcement play on investors’ minds.
  • KSE-100 index closes the week with a loss of 163 points at 43,396 points.
  • Foreign selling continues this week, clocking in at $1 million. 

KARACHI: The Pakistan Stock Exchange (PSX) witnessed a tepid week as concerns over the upcoming monetary policy announcement played on investors’ minds and dimmed trading activity. Amid lacklustre trading, the KSE-100 index closed the week with a loss of 0.4% or 163 points at 43,396 points.

“The market carried the dullness from last week on account of widening of trade deficit and surge in inflation while an alleged Omicron case in Karachi further deteriorated the sentiment,” a report from Arif Habib Limited said, adding that the momentum changed after news regarding the new COVID variant was deemed non-lethal.

Benchmark KSE-100 trading curve for the outgoing week.

Trading on Monday kicked off on a positive note. The KSE-100 index traded on both sides of the fence, but closed with a gain owing to assurance from the finance adviser regarding economic recovery.

Adviser to Prime Minister on Finance and Revenue Shaukat Tarin on Friday had reassured people and markets that “the economy was on a growth path” and “the difficulties of the lower-middle urban class would subside in a few months”.

Moreover, a slight recovery in the rupee after the receipt of $3 billion funds from Saudi Arabia gave investors much-needed confidence.

Taking a cue from global markets, the investors opted to assume fresh positions on Tuesday and the index rallied over 500 points on the back of expectations that the circular debt issue will be resolved soon.

However, the optimism faded on Wednesday and the index continued to record losses in the rest of the trading sessions of the week.

Market players chose discretion over valour as they awaited monetary policy signals from the State Bank of Pakistan (SBP).

During the last three sessions, the bourse traded between hope and despair, which eventually let loose the bears who dragged the bourse into the red.

Meanwhile, the investors kept a close watch on political news about the Pakistan Democratic Movement’s (PDM) inflation march and the upcoming mini-budget.

Pressure was also observed due to the news that Pakistan may have detected its first COVID-19 case of the Omicron variant. Talk of a likely lockdown to be imposed in certain areas of Karachi weighed on investors’ sentiment.

Moreover, continuous depreciation in the Pakistani rupee against the US dollar, which dropped to an all-time low of Rs177.71 against the greenback in the interbank market, added fuel to the already negative climate.

Other major developments during the week were: central bank’s foreign exchange reserves increased by $2.65 billion, expectation of reduced rate of GST on drugs raw materials in upcoming mini budget, EU hailed Pakistan’s progress on FATF action plans, steel bar prices rose to Rs197,500 per ton, supernet bagged Rs100 million cyber security contract from SBP and circular debt soared to Rs2.419 trillion by October 31.

Meanwhile, foreign selling continued this week, clocking in at $1 million against a net sell of $62.84 million recorded last week. Selling was witnessed in commercial banks ($1.2 million), fertiliser ($0.5 million), exploration, and production ($0.3 million).

On the domestic front, major buying was reported by other organisations ($3.9 million), followed by companies ($2.1 million), and individuals ($1.3 million).

During the week under review, average volumes clocked in at 204 million shares (down by 36% week-on-week), while average value traded settled at $42 million (down by 54% week-on-week).

Major gainers and losers of the week

Sector-wise positive contributions came from oil and gas exploration companies (+320 points), technology and communication (+257 points), food and personal care products (+32 points), chemical (+29 points), and insurance (+10 points). On the flip side, negative contributions came from commercial banks (-187 points) and cement (-112 points).

Scrip-wise major gainers were TRG Pakistan (+208 points), Pakistan Petroleum (+155 points), Oil and Gas Development Company (+101 points), Systems Limited (+49 points) and Mari Petroleum (+34 points). Meanwhile, major losers were Engro Corporation (-66 points), HBL (-64 points) and UBL (-44 points).

Outlook for next week

A report from AHL predicted: “We expect the market to remain range-bound in the upcoming week. The monetary policy is scheduled on December 14, where we project a hike of 100bps.”

“Any increase in the benchmark policy rate exceeding that will further dampen the sentiment for highly levered stocks,” it said, adding that a mini-budget is expected in the near future, where the market will react to any introduction, re-imposition or removal of duties and subsidies.

“The KSE-100 is currently trading at a PER of 4.6x (2022) compared to Asia-Pacific regional average of 14.9x while offering a dividend yield of 8.8% versus 2.2% offered by the region,” the brokerage house stated.

Source: Geo News

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