Stocks to take cue from IMF talks

September 19, 2021

Stocks mostly remained under pressure in the outgoing week, but are seen mixed-to-positive down the line, anticipating productive talks with the International Monetary Fund .Due to several reasons,...

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Stocks mostly remained under pressure in the outgoing week, but are seen mixed-to-positive down the line, anticipating productive talks with the International Monetary Fund (IMF).

Due to several reasons, the KSE-100 Shares Index closed at 46,636 points at Pakistan Stock Exchange (PSX), down 562 points or 1.19 percent week-on-week.

Brokerage Arif Habib Limited in a note said they expected the market to remain positive in the upcoming week attributable to talks with IMF for the sixth tranche to start at the end of the current month.

“On the other hand, decline in infection ratio of the Covid-19 pandemic in Pakistan and slowdown in global oil prices may relieve pressure off the external account.” It reported.

However, it added that current macro-economic concerns such as rising imports, higher inflation due to increasing petroleum prices, and pressure on the currency could deteriorate investor sentiment.

“This week’s trading activity remained jittery amid macro-economic concerns which include rupee slumping to an all-time low of 169.1 against USD, the expectation of higher current account deficit due to rising imports which could stress reserves, temporary suspension of gas supply to general industries, and higher international commodity prices,” said the Arif Habib Ltd report.

However, sentiment started reviving amid some recovery in the currency parity, the slowdown in Covid-19 cases which resulted in relaxation in restrictions in Sindh, and restoration of gas supply to general industries, it added

Average volumes clocked in at 400 million shares, down 7 percent week-on-week, while average traded value settled at $90 million, up 3 percent week-on-week.

Foreigners offloaded stocks worth $10.9 million compared to a net sell of $18.6 million last week. Major selling was witnessed in commercial banks ($12.7 million) and all other sectors ($2.2 million). On the local

front, buying was reported by individuals ($16.8 million) followed by banks/DFIs ($7.3 million).

Sector-wise negative contributions came from cement (287 points), refinery (55 points), oil & gas marketing companies (54 points), food & personal care products (51 points), and technology & communication (44 points). Stock-wise negative contributors were LUCK (131 points), MEBL (102 points), SYS (70 points), MLCF (43 points), and DGKC (41 points).

Sectors, which contributed positively, included commercial banks (130 points), tobacco (6 points) and synthetic & rayon (5 points). Meanwhile, scrip-wise positive contributions came from UBL (73 points), HBL (56 points), and FFC (50 points).

Major events during the outgoing week were: Cabinet Committee on Energy clears payment of Rs131 billion to 11 IPPs of the 2002 power policy -barring Nishat Chunian Limited; pressure was observed on rupee during the week as it hit an all-time low of 170.50 on Thursday before recovering on alleged central bank intervention, this pressure on rupee can be attributed to increasing current account deficit; July LSMI output number declined by 4.91 percent on month-on-month basis; petroleum product prices were increased by up to Rs5.92 per litre from September 16, 2021; and reserves held by State Bank of Pakistan remained stable at $20 billion.



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