The benchmark index of Pakistan Stock Exchange closed the week ended on April 13, 2023 with a dip of 0.47%WoW. Despite Pakistan’s completion of all prior actions, the resumption of the IMF program is still awaited. According to news sources, the pain point between Pakistan and the IMF of late is commitments from friendly countries.
Furthermore, the circular debt of power sector increased by PKR419 billion during 8MFY23, taking the total circular debt to PKR2.67 trillion despite increasing electricity tariffs.
With the interest rates at 21% and uncertainties regarding the country’s economic position, participation remained lackluster during the week, with daily volumes averaging at 83 million shares during the week, as compared to 110.18 million shares in the prior week depicting a decline of 24.1%WoW.
Other major news flows during the week included; 1) IMF drastically cuts Pakistan’s FY23 growth forecast to 0.5%, 2) IMF projects fall in GoP gross debt to 73.6% of GDP, 3), March workers’ remittances hit 7-month high of US$2.5 billion, 4) RDA inflows cross US$6 billion mark, 5) SBP raises via auction for PIBs, and 6) Banks’ deposits increase by 15% YoY to PKR23.56 trillion.
The top performing sectors were: Commercial Banks, Technology and Communication, and Closed-End Mutual funds, while the least favorite sectors were: Vanaspati & Allied industries, Textile Weaving, and Tobacco.
Top performing scrips were: FABL, LOTCHEM, KOHC, SCBPL, and MUGHAL, while laggards included PSEL, EPCL, GLAXO, AIRLINK, and PAKT.
Flow wise, individuals were the major buyers with net buy of US$0.21 million, while companies were major sellers, with a net sell of US$0.35 million.
Any news flow regarding materialization of the commitments from friendly countries will put the IMF program back on track and will support the market sentiment.
According to recent news flow, Pakistan is likely to receive US$ one billion financing commitment from UAE. NEPRA has approved positive tariff adjustment of 47 paisas to recover PKR15.45 billion from customers during 2QFY23 under QTA—likely to keep the circular debt in check.
With this backdrop, the market is expected to remain range bound, with any news regarding the IMF program, including an Staff Level Agreement, would lead to a euphoric move in the market.