Pakistan Stock Exchange remains under pressure due to non-yielding IMF talks and political uncertainty

The week ended on June 02, 2023 witnessed positive movement in the first two days, turned bearish on Wednesday, but closed the week on a positive note. The benchmark index gained 388 points to close at 41,353 points, a paltry gain of 0.95%WoW.

Participation in the market remained strong, average daily trading volume grew to 180.3 million shares from 117.7 million shares a week ago, an increase of 53.1%WoW. On the IMF front, uncertainty continues to linger as talks of Pakistan and the IMF going their separate ways continued to linger.

However, rumors were clarified by Minister Aisha Ghaus Pasha, expressing that the incumbent government is committed to the IMF program.

SBP held reserves eroded by US$102 million due to external debt payments, to US$9.09 billion as of May 26, 2023. PKR depreciated by 0.18%WoW to close the week at PKR285.68/US$.

Other major news flows during the week included: 1) sales of petroleum products plunged by 40% in May amid economic slowdown, 2) cement sales rose 9% in May, signaling an uptick in construction, 3) FBR collection remained PKR62 billion short of PKR621 billion monthly target, 4) GoP borrowed PKR2.286 trillion through treasury bills auction, 5) Price of petrol and diesel reduced by PKR8 and PKR5 respectively, 6) World Bank approved US$213 million financing for flood affected.

Sector-wise, Synthetic & Rayon, Close-end Mutual Fund, and Sugar & Allied Industries were amongst the top performers, while Textile Weaving, Property, and Food & Personal care products were amongst the worst performers.

Flow-wise, major selling was recorded by Mutual Funds with a net sell of US$3.19 million. Brokers absorbed most of the selling with a net buy of US$1.93 million.

Top performing scrips during the week were: CEPB, INIL, HGFA, DGKC, and PIBTL, while top laggards were: GATM, JVDC, UPFL, HMB, and FHAM.

Market is expected to remain range bound in the near future and the upcoming federal budget on June 09, would dictate the market direction.

As evident with the recent happening on the suggested tax on retained earnings profit, followed by announcements of EOGMs by companies to increase authorized share capital.

Analysts advise investors to take a cautious approach while building positions in the market and continue to advocate the stocks with dollar-denominated revenue streams (Technology and E&P sector), to hedge against the currency risks or companies with healthy forward dividend yields.

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