PSX weekly review: Stock market ends three-week rally, falls 679 points

PSX weekly review: Stock market ends three-week rally, falls 679 points

An investor can be seen speaking on his phone in the main hall of the Pakistan Stock Exchange (PSX)

KARACHI: The Pakistan Stock Exchange (PSX) had a relatively volatile week as its winning streak of the past three weeks came to an end. The stock market fell 679 points (1.57%) over the weekend to settle at 42,592. This was as benchmark indices continued to be weighed down by external issues and the rapid depletion of FX reserves.

The week started negative as the stock fell more than 400 points on the first day of the rollover week as market participants refrained from opening new positions ahead of the monetary policy announcement.

The tide turned on Tuesday and the market rose after improving investor sentiment after the Central Bank of Pakistan (SBP) decided to keep monetary policy rates on hold for the next seven weeks. Moreover, Qatar’s announcement of his $3 billion aid to Pakistan has sparked a bullish trend in the market.

But there was a dramatic turnaround on Wednesday as the bears regained the upper hand as euphoria over inflows from Qatar and Saudi Arabia waned and investors sold overbought stocks. With no visible progress ahead of the International Monetary Fund (IMF) Governing Council meeting scheduled for August 29, concerns about the economic health add to the bleak sentiment, leaving the market in the red until the end of the rollover week.

Other notable developments this week include: Oil field discovers hydrocarbons at Transj West-2 in Khyber Pakhtunkhwa, Asian Development Bank approves $700,000 in technical assistance, international agencies announce $500 million in flood aid, foreign direct investment in July was reduced to $59 million and taxed at Rs.36 billion.

Meanwhile, international sales continued this week, totaling $1.9 million compared to last week’s record net sales of $2.8 million. Sales were seen in commercial banks ($3.7 million) and exploration and production ($0.7 million).

Domestically, banks and development finance institutions reported more purchases ($4.1 million), followed by individuals ($3.8 million).

Average weekly volume was 250 million shares (down 52% from the previous week), with an average traded value of $37 million (down 35% from the previous week).

Major gainers and losers of the week

Negative factors by sector are Banks (-143 points), Others (-138 points), Energy (-101 points), Oil Distributors (-80 points) and Chemicals (-59 points).

On the other hand, fertilizer (+70 points) and cement (+28 points) contributed positively.

The biggest share declines were Pakistan Services (-137 points), Hubco (-104 points), Pakistan State Oil (-79 points), HBL (-48 points) and TRG Pakistan (-48 points).

Meanwhile, Lucky Cement (+75 points), Systems Limited (+75 points), TGL (+26 points), Fauji Fertilizer (+25 points) and Pakistan Oilfields (+19 points) were the top winners.

Outlook for next week

Arif Habib Limited reports that the IMF is expected to approve a $1.17 billion tranche, which will be paid out within about a week, as the IMF-Pakistan meeting is scheduled for next week.

“As earnings season has begun, it is likely that some sectors and securities will remain in focus,” he said, predicting the market will likely remain bullish next week.

“The KSE-100 is currently trading at a P/E ratio of 4.2x (2022) compared to the Asia-Pacific average of 12.7x, with a dividend of 9.6% compared to the 2.7% offered in the region. We provide yield,” explained the brokerage firm.

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