Pakistan stocks managed to post 1.3 percent weekly gains in a pre-budget rally in the outgoing week. The market next week is expected to stay around reactions to the budget announced on Friday as well as monetary policy meeting which is due on Monday, traders said.
The benchmark KSE-100 index closed at 41,904 points, representing a weekly increase of 551 points. Various sectors performed differently, with notable gains seen in chemicals, oil and gas, and refinery sectors, while banks and tobacco sectors underperformed.
According to Wasil Zaman, an analyst at JS Research, the chemicals sector experienced significant growth, with a 15 percent increase week on week (WoW). The oil and gas sector also showed strong performance, rising by 8.9 percent WoW. The refinery sector witnessed a 4.2 percent WoW increase. Conversely, the banks sector faced a decline of 1.6 percent WoW, and the tobacco sector experienced a notable decline of 6.1 percent WoW.
Foreign investors remained net buyers during the week, with a total investment of $2.1 million. The oil and gas sector attracted the highest buying activity, with foreign investors investing $1.1 million in the sector.
The government unveiled its Rs14.5 trillion budget on Friday. The budget aimed to achieve a consolidated budget deficit target of 6 percent of GDP, with a growth target of 3.5 percent, and an inflation target of 21 percent. The targets were aligned with market expectations.
In addition, the State Bank of Pakistan is expected to keep the interest rate unchanged in its upcoming Monetary Policy Committee meeting scheduled for Monday, June 12, 2023. The decision is likely due to the persistently high inflation rate in the country.
SBP reserves decreased by $179 million during the week, reaching a total of $3.9 billion, mainly due to external debt repayments.
The World Bank, in its latest report, revised down Pakistan's GDP forecast from 1.6 percent to 0.4 percent for FY23. The report highlighted several factors contributing to the downward revision, including the impact of floods, social and political tensions, high inflation, and policy uncertainty.
Nabeel Haroon, an analyst at Topline Securities, attributed the 1.33 percent WoW increase in the KSE-100 Index to a pre-budget rally. Investor interest was observed in various sectors, including chemicals, technology, OMCs (oil marketing companies), textile, and refinery sectors, all of which experienced positive growth.
During the week, the average daily traded volume stood at 217 million shares, with a total value of Rs6 billion.
In terms of flows, foreign corporate entities, broker prop books, companies, and individuals were net buyers of equities worth $1.61 million, $0.70 million, $0.67 million, and $0.43 million, respectively, as of the close of the week.
However, mutual funds and insurance companies were net sellers of equities worth $3.63 million and $0.41 million, respectively.
Overall, the Pakistan Stock Market displayed positive momentum during the week, driven by the pre-budget rally and increased investor interest in various sectors. However, concerns about the country's GDP growth, inflation, and external debt repayments persist, as highlighted by analysts and international institutions like the World Bank.