Stocks closed lower in the outgoing week amidst a surprise increase in the policy rate and political noise, with analysts expect mostly range-bound activity in the week ahead.
However, an extension of the fund term by Saudi Arabia could provide some relaxation to the market, traders said.
Arif Habib Ltd in its market wrap said, “We expect the market to remain range-bound. The extension in the term of Saudi Fund worth $3 billion will provide a breather to the concerns regarding external repayments.”
The brokerage added, “We do highlight that Pakistan International Sukuk is maturing on 5th December 2022, however, as per SBP, funding against this has already been arranged.”
The market commenced on a negative note amid a surprising policy rate hike by the SBP (+100bps to 16 percent) last Friday coupled with political noise, with the index losing 973 points intraday.
The momentum briefly turned green after the SBP received $500 million from the Asian Infrastructure Investment Bank. Rupee also appreciated against greenback, gaining Re0.25 or 0.11 percent week-on-week to settle at Rs223.69.
However, momentum shifted back to the negative zone, after PBS data depicted 24 percent month-on-month increase in trade deficit during November 2022. In addition to this, the consumer price index settled at 23.84 in November 2022, while decline of $327 million in SBP reserves hurt sentiments even further.
With depleting foreign exchange reserves and a delay in talks with the IMF, economists and analysts have been giving various suggestions to the government.
Analyst Khurram Schehzad talking about the state of the economy of the country said, “Country’s economy calls for a joint effort, collective wisdom and statesmanship from all stakeholders for the larger interest of the country.”
During the outgoing week, spurred by weak economic data, the market closed at 42,150 points, shedding 787 points (down 1.8 percent WoW). Average volumes clocked in at 162 million shares (up 1 percent) while the average value traded settled at $24 million (down 7 percent).
Foreign buying continued during this week, settling at $6.6 million compared to a net buy of $1.1 million last week. Major buying was witnessed in E&Ps ($2.0 million), cements ($1.8 million), and technology ($1.6 million). On the local front, selling was reported by mutual funds ($6.3 million) followed by broker proprietary trading ($2.1 million).
Sector-wise negative contributions came from cements (243 points), technology (101 points), fertilisers (83 points), E&Ps (70 points) and banks (62 points). Scrip-wise negative contributors were TRG (102 points), Lucky Cement (79 points), Cherat Cement (43 points), Millat Tractors (39 points) and Maple Leaf Cement (38 points).
Sectors which contributed positively included miscellaneous (82 points), and power (48 points). Meanwhile, scrip-wise positive contributions came from Pakistan Services (87 points), Hubco (59 points), Systems Ltd (24 points), HBL (12 points) and Ibrahim Fibres (4 points).
Analyst Nabeel Haroon at Topline Securities said the decline in the benchmark index can be attributed to increasing in benchmark interest rate by SBP in its latest monetary policy announcement last Friday by 100bps to 16 percent.
Other major news of the week included; Hubco Boiler Steam blowing project completed at Thal Nova; ECC approved Kissan Package; power tariff for tube wells reduced to Rs13/unit; Engro Fertilizers resumed operations of Base Plant-1, while SBP declared that the banking sector showed robust performance in 1HCY22.