PSX: KSE-100 index dominated by bears

• The rupee hit an all-time low of 228.37 against the US dollar last week.
• Fitch has lowered Pakistan’s rating outlook from stable to negative.
• Mutual funds reported the most selling on the domestic front ($7.76 million).

At the Pakistan Stock Exchange (PSX), the bears were in total control last week as the market declined on three of the five trading days due to uncertainties around the final clearance of the $6 billion International Monetary Fund (IMF) loan package and growing political unrest.

Following the by-elections and Punjab’s election of a new chief minister, market participants were seen adopting a cautious stance.

As foreign reserves were depleted and there was uncertainty regarding funding from friendly nations, the rupee also started to lose value in relation to the US dollar in the week under review, reaching an all-time low of 228.37. This increased investor concerns and prevented them from taking on new positions.

Before disbursing the $1.2 billion loan, the IMF is also determining which friendly nations are prepared to give financial assistance to Pakistan. Given the circumstances, the market was under pressure, and on Thursday, the index dropped below 40,000 points for the first time since November 2020.

Fitch also lowered Pakistan’s rating outlook from stable to negative.

As a result, the benchmark KSE-100 index lost 1,998 points, or 4.75 percent, to conclude the week at the 40,077 point level.

Foreign direct investment increased by 2.6 percent in FY22 to $1.868 billion, SBP reserves decreased by $9.329 billion due to debt repayments, Pakistan international bond yields increased by 50.6 percent, large-scale manufacturing increased by 11.7 percent in 11MFY22, and PPIB extended the due financial close date for the Kohala Hydropower Project by three years.

In contrast to last week’s net sell of $1.40 million, this week’s foreign purchases totaled $3.43 million. Technology saw the most buying ($1.98 million), followed by all other industries ($0.75 million).

Mutual funds reported the most selling on the domestic front ($7.76 million), followed by insurance companies ($2.22 million).

Average volumes for the week under consideration were 163 million shares, which is an 8 percent week-over-week decrease, and the average value moved ended up at $21 million (down by 31 percent week-on-week).

Significant weekly winners and losers

Commercial banks (-499 points), fertilizer (-294 points), cement (245 points), oil and gas exploration businesses (-187 points), and power generation and distribution were among the sectors that made negative contributions (-110 points).

Contrarily, sugar and related industries (+3 points) and closed-end mutual funds (+2 points) made positive contributions.

HBL (-152 points), Lucky Cement (-92 points), Engro Corporation (-92 points), Engro Polymer and Chemical (-91 points), and Hubco were the major scrip losers (-90 points).

Shakarganj Limited (+3 points), HBL Growth Fund (+2 points), Highnoon Laboratories (+2 points), Murree Brewery Company Limited (+1 points), and Dolmen City REIT (+1 points) were the main gainers in the meantime.

Expected next week

According to an AHL analysis, “The market is anticipated to be favorable in the approaching week. The start of the result session the following week is expected to keep some scrips in the spotlight.

“Scrips are also selling at low prices, which could renew the momentum. We advise the investors to select just blue chip stocks, it stated.

According to the brokerage house, “The KSE-100 is now trading at a PER of 4.1x (2022) compared to the Asia-Pacific regional average of 11.8x while offering a dividend yield of 9.4% vs 2.8 percent supplied by the area.”

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