Market participation also registered a decline of 25%WoW, averaging at 161.7 million shares as compared to an average of 215.7 million shares a week ago. Despite the negative impact of the budget, including the imposition of a 10% super tax, windfall tax, and tax on bonus share, the market showed some resilience.
Meanwhile, in the last Monetary Policy Committee (MPC) meeting of FY23 on Monday, State Bank of Pakistan maintained the policy rate at 21%.
As per news flow, GoP has paid US$1.0 billion as debt repayment during the week. The SBP in its post MPS briefing apprised that only US$800 million of repayment was due for the remaining month. The decline in reserves resulting from this repayment is expected to be visible in the foreign exchange numbers to be released next week. As of June 9th, foreign exchange reserves held by SBP were reported at US$4.02 billion, which are anticipated to drop below the US$3 billion mark due to the rumored debt repayment.
On the currency front, PKR lost 0.09%WoW to close at PKR287.2/US$.
Other major news flows during the week included: 1) LSM took a nosedive of 21.07% in April, 2) US$7 billion Chinese and Saudi deposits and PKR402 billion paid as cost of rollovers, 3) July-May remittances plunged 13% to US$24.83 billion, 4) Car sales took a nosedive of 80% in May, 5) Tax expenditures constitute 36.43% of FBR tax collection, 6) IMF came down hard on Pakistan’s budget proposals.
Sector-wise, Leasing Companies, Chemical, and Textile Weaving were amongst the top performers, while Transport, Modarabas, and Textile Spinning were amongst the worst performers.
Flow wise, major net selling was recorded by Mutual funds with a net sell of US$1.97 million. Individuals absorbed most of the selling with a net buy of US$4.40 million.
Top performing scrips during the week were: PGLC, SHEL, COLG, MTL, and BNWM, while top laggards included SML, KEL, HINOON, PSMC, and FABL.
Market is expected to remain range bound in the short term, primarily due to the lack of clarity on the IMF front as the current IMF program is nearing expiration with less than half a month remaining.
Additionally, political instability will also contribute to investors’ uneasiness and impact the market confidence. It is advisable for investors to remain cautious while building positions until stability improves.
Analysts continue to advocate stocks with dollar denominated revenue streams i.e. E&P and Technology sector. Additionally, considering companies with healthy forward dividend yields can be a strategy to explore.