Business

KSE-100 falls on investor jitters


KARACHI:

The Pakistan Stock Exchange (PSX) endured a jittery trading week as poor macroeconomic indicators coupled with concerns over the International Monetary Fund’s (IMF) review of Pakistan’s economy dampened investor interest.

As a result, the benchmark KSE-100 index shed 394 points, or 0.88%, to close at 44,477 points.

“In addition to the Pandora Papers, an alarming import bill, higher-than-expected inflation reading, rising global commodity prices and concerns over the IMF review continued to reduce investor activity,” said JS Global analyst Amreen Soorani.

The outgoing week, which ended on October 8, kicked off positively and the KSE-100 index inched upwards on Monday as hopes for a successful IMF review encouraged market participants to make fresh investment.

The bourse turned bearish for the next two sessions as the index dived over 600 points owing to a twofold increase in trade deficit in July-September 2021 on a year-on-year basis, which shattered investor confidence.

Further depreciation of the rupee against the US dollar to a new all-time low of Rs170.96 accelerated the stock market’s decline. The local currency remained under pressure and took its toll on the investment climate in the stock market.

Additionally, a surge in prices of global commodities, with coal rates soaring to record high, added to investor panic, who anticipated that inflation would go further up over the next few months in Pakistan.

The two-day bear-run came to an end at the PSX on Thursday and bulls regained control of the market following a slight recovery in rupee’s value, which revived investor spirits.

The final session again saw the building up of selling pressure after the World Bank lowered its forecast for Pakistan’s economic growth in the current fiscal year and rejected growth figure for the previous fiscal year.

Reports of massive foreign selling at the Pakistan bourse triggered an overall selling spree and the market closed last day of the week with a loss.

“We expect the market to show positivity in the upcoming week, which will be attributable to the conclusion of talks with the IMF for the next loan tranche,” stated a report of Arif Habib Limited.

“However, current macroeconomic concerns like rising imports, higher inflation reading due to increasing petroleum prices and pressure on the currency can keep the market range bound.”

Average daily traded volume dropped 25% week-on-week to 265 million shares while average daily traded value fell 21% week-on-week to $60 million.

In terms of sectors, negative contribution came from cement (268 points), fertiliser (110 points), oil and gas marketing companies (47 points), power generation and distribution (30 points) and engineering (25 points).

Stock-wise, the contribution to the downside was led by Lucky Cement (139 points), Fauji Fertiliser (45 points), Pakistan Petroleum (39 points), Cherat Cement (38 points) and Sui Northern Gas Pipelines (34 points).

On the flipside, major gainers were Mari Petroleum (144 points), UBL (69 points), Searle (41 points), Millat Tractors (27 points) and Colgate-Palmolive (26 points).

Foreigners were net sellers during the week under review as they offloaded stocks worth $3.7 million compared to $21.9 million last week. Major selling was witnessed in commercial banks ($9.85 million) and fertiliser companies ($4.33 million).

On the domestic front, buying was reported by individuals ($7.13 million) followed by mutual funds ($3.61 million).

Among other major news of the week were inflation rising to 9% in September, cement sales dropping almost 6% in July-September 2021, State Bank announcing new steps to curb dollar outflows and the IMF demanding an increase in income tax, sales tax and regulatory duty.

Published in The Express Tribune, October 10th, 2021.

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