Pakistan Stock Exchange (PSX) remained volatile throughout the week ended on May 19. 2023. The week started off on a positive note, as the unrest in the country seemed to have subsided after the release of Imran Khan.
However, the news that Pakistan was planning to abandon the IMF’s 9th review created uncertainty in the market. The KSE-100 index gained 112 points during the week, closing at 41,599 points, a gain of 0.27% a week ago.
Participation in the market witnessed a decline of 2.3%WoW, with daily trading volumes averaging at 130.5 million shares as compared to 133.5 million shares in the earlier week.
On the fiscal front, country posted a Current Account surplus of US$18 million in April 2023. However, the number was lower than expected due to a decline in remittances (down 13% MoM) and poor FDI inflows.
The foreign exchange reserves held by State Bank of Pakistan (SBP) declined by US$72 million to US$4.3 billion as on May 12, 20234.
Other major news flows during the week included: 1) Jul-Mar LSMI output declined 8.11%YoY, 2) GoP debt was recorded at PKR57 trillion by March end, 3) Debt servicing anticipated to consume PKR7.6 trillion, 4) Oil imports decline 48% in April, 5) RDA inflows crossed US$6 billion mark in April, 6) During May-July the GOP intends to borrow record PKR9.4 trillion.
Sector-wise, Exchange Traded Funds, Miscellaneous, and Tobacco were amongst the top performers. As against his Close-end Mutual Fund, Woollen, and Leasing Companies were amongst the worst performers.
Major net selling was recorded by Mutual Funds with a net sell of US$1.5 million. Insurance companies absorbed most of the selling with a net buy of US$4.0 million.
Top performing scrips during the week were: PSEL, AIRLINK, SRVI, NESTLE, and LOTCHEM, while top laggards were: PGLC, BNWM, PIOC, BAHL, and TRG.
Going forwards, positive development towards political stability would instill the investor’s confidence. However, market upside is expected to remain limited due to record high interest rates along with a decline in economic activity and rampant inflation.
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.