After the surge which the market experienced in the earlier week based on positive sentiment about the new Government formed by the coalition parties, market witnessed a downward correction. The benchmark index of Pakistan Stock Exchange (PSX) lost 1,049 points during the week ended April 23, 2022, down 2.25%WoW to close at 45,553 points.
Moreover, the Rupee depreciated by 2.86%WoW due to the growing Current Account deficit.
Due to uncertainty regarding new economic policies, the market exhibited thin volumes with average daily turnover being 225 million shares, amounting to a decline of 53%WoW.
IMF has laid out certain conditions in the ongoing discussions, with the key conditions being the withdrawal of fuel subsidy, the abolishment of the tax amnesty scheme along with additional tax measures, and an increase in the Power tariff. Miftah Ismail, Finance Minister left for US to hold talks with IMF for the ongoing review.
Other major news flows during the week were: 1) Bond yields were up, 2) Imports for Jul-Mar period were up 49%YoY to US$58.9 billion, 3) LSM posted a growth of 7.8% during Jul-Feb, 4) Procurement of RLNG cargoes from Qatar for May and June to relieve the gas crisis, 5) Government contemplated raising fuel prices for consumers, and 6) Prime Minister Shehbaz Sharif announced his cabinet.
Sector wise, the biggest gainers were Sugar & Allied and Oil & Gas Exploration, up 2.1%WoW and 2.0%WoW respectively. Tobacco and Leather declined the most with both down 6.1%WoW, followed by Paper and Leasing companies down 5.6% and 5.3%respectively.
Stock wise, top performers were: LOTCHEM, APL, OGDC, PPL, and EPCL, while laggards were: CHCC, SRVI, FCCL, UNITY and MUGHAL. Flow wise, Mutual Funds remained the net sellers offloading US$6.0 million, followed by Banks & DFIs (US$1.2 million), and Insurance companies (US$0.3 million).
Foreign investors continued to liquidate their positions, with a net sell of US$1 million. Individuals and Companies remained on the buying side, with a net buy of US$7.0 million and US$0.9 million respectively.
After the downward correction this week, analysts expect the market to remain jittery in the near term. As the country settles into the new regime, economic policies are set to change, causing uncertainty in the market until things become clearer. News from IMF is bound to dictate market sentiments in the near term, with tough conditions being laid out for the country in the ongoing review. The ongoing results season is vital in formulating investment strategies, as best performing scrips are likely to experience gains. Analysts continue to advise investors to accumulate on fundamental scrips with a long-term focus, and prefer Refineries, Fertilizers and Chemicals sectors.