Pakistan Stock Exchange (PSX) performance continued to remain disappointing throughout the week ended on September 16, 2022, with benchmark index shedding 0.64%WoW to close at 41,679 points.
Market participation improved with the average daily trading volume jumping 32.3%WoW to settle at 233 million shares in the all share index. However, the participation in the KSE-100 index remained dull with averaging less than 94 million shares throughout the week, up 46%WoW.
Despite IMF’s releasing the tranche of US$1.2 billion, the local currency continued to lose ground against US$ during the week, depreciating 3.7%WoW to close around PKR237 per US$ in the interbank market. At the same time, the spread between the interbank and the open market continued to grow with US$ touching PKR 249 per US$ in the open market.
SPI during the week eased off slightly with SPI index sliding by 19bpsWoW in the past week. Pakistan Bureau of Statistics also released the trade numbers for the month of August 2022 where the trade deficit widened by 31%MoM to US$3.6 billion.
Major news flows during the week: 1) foreign exchange reserves declined by US$156 million during the week to US$8.6 billion, 2) Fitch solutions downward revised GDP growth estimates of Pakistan for FY23 to 0.2%, 3) SBP raised PKR235 billion via PIB auction with yields largely remaining flat, 4) August 2022 remittances post 8%MoM growth to US$2.7 billion, 5) Car sales dropped by 50%YoY to 8,890 units in August 2022.
Top performing sectors were: 1) Vanaspati & Allied, Technology, Textile Weaving, Leasing, and IPPs, while the least favorite sectors were: Tobacco, Synthetic & Rayon, Textile Spinning, E&Ps, and Miscellaneous.
Stock-wise, top performers in the KSE-100 were: TRG, HGFA, JVDC, ATLH, and COLG, while laggards were: POL, SHFA, APL, NATF, and PAKT. Volume leaders were: TRG, WTL, and KEL.
Flow-wise, Foreigners were the largest buyers with a net buy of US$13.8 million followed by Banks (US$1.3 million). While Insurance Companies and Mutual Funds reported a net sell of US$8.5 million and US$3.6 million respectively.
Market is expected to remain jittery going forward as the local currency is unable to find solid grounds against the Greenback. With anticipation building in the global market of a likely rise in interest rates by US-FED by 50bps to 100bps, the US$ will likely remain strong, which will add to further pressure on PKR.
With floods also wreaking havoc on the economic activity and agriculture output, the import bill also remain bloated, which means September 2022 current account deficit may also surprise estimates on the higher side.
Finally, political noise will also remain heightened with consensus still not reached on the extension of army chief tenure. Consequently, the market will remain jittery amid low volumes. Investors are advised to stay cautious, while building new positions in the market.