Pakistan stocks likely to remain bullish on IMF review positive outcome

KARACHI: After a roller-coaster ride during the week ended October 1, 2021, the Pakistan stocks are likely to take direction from the upcoming results season and the International Monetary Fund (IMF) review, where formal talks are expected to begin next week.

“[The] government seems to be preparing for strict measures to increase the tax base. Meanwhile, gas tariff hikes seem to be a possibility, as well,” an analyst at AKD Securities said.

“Investors should adopt a top-down approach to investing where [the] possibility of further interest rate hikes could bring [the] banking sector into [the] limelight, while techs and textiles (on currency depreciation where stronger earnings are yet to be priced in) are other sectors of interest.”

The Pakistan Stock Exchange KSE-100 shares index shed 0.44 per cent, or 201.82 points, to close at 44,871.70 points. The KSE-30 shares index shed 0.75 per cent, or 134.2 points, to close at 17,608.16 points.

“This was the third Friday that the index closed negative on a weekly basis,” Ali Zaidi at JS Global Capital said.

Average daily traded volumes declined 7.5 per cent to 355 million shares/day, while the value of traded shares averaged at $76 million/day. Foreign selling was witnessed in the outgoing week, clocking-in at $21.9 million, compared with the net buying of $6.7 million last week.

“A substantial portion of the net selling by foreign investors’ was absorbed on the local side by banks and insurance companies,” Zaidi added.

On the news front, the Paris Club extended Pakistan’s debt payment deadline of $1 billion until December 2021. Moreover, news flow gave rise to speculation that Pakistan entered into an agreement to get oil on deferred payments from Saudi Arabia that may likely relieve some pressures on the import bill.

Internationally, coal prices have continued to rise beyond $200/tonne, more than the levels last seen in the Global Financial Crisis of 2008, causing the cement sector to be a leading laggard during the week.

On the revenue front, the Federal Board of Revenue (FBR) has collected Rs1.395 trillion in taxes during the first quarter of the fiscal year, exceeding its target and showing 38 per cent growth from Rs1.011 trillion collected in the same period last year.

The central bank’s forex reserves declined $248.9 million to $19.29 billion during the week ended September 24, 2021.

“The market is expected to be positive in the coming week, as scrips are trading at attractive valuations,” an analyst said.

“Furthermore, [the] IMF review is starting from October 4, 2021, which if successful, may provide [the] much-needed respite to the ailing investment sentiment.”

Further, the recent statement of US Secretary of State Antony Blinken, recognising Pakistan’s crucial part in making talks with the Taliban successful will ease off investors’ concerns.