PSX expected to remain volatile

KARACHI: The Pakistan Stock Exchange (PSX) is likely to remain volatile in the coming week, as pressure persists, owing to stalled development over the International Monetary Fund (IMF) programme, analysts said.

An analyst at Pearl Securities said the benchmark KSE-100 Index ended the week gaining 587 points to close at 41,008 points. The All-share average traded volume during the week remained at 176 million, compared with the previous week level of 214 million, down 18 per cent on a weekly basis.

“The upward momentum of the market slowed down, as profit-taking ensued and the bullish sentiments remained subdued by the economic uncertainty, weakening economic fundamentals and the policies meant to address these alarming issues,” he added.

The equity market moved in line with the news flows, including the lack of progress in the ninth review of the International Monetary Fund (IMF) loan programme, National Security Council (NSC) meeting raising hopes for expediting the resolution of the circular debt issue and the Sensitive Price Indicator (SPI) posting an increase of 29.3 per cent on a yearly basis, he remarked.

Pakistan’s public debt increased 24.2 per cent on a year-on-year basis to Rs50.9 trillion in November 2022, the foreign exchange reserves held by the State Bank of Pakistan (SBP) almost reached a nine-year low level.

The foreign exchange reserves held by the SBP fell $245 million to reach $5.57 billion during the week ended December 30, compared with $5.82 billion on December 23.

According to the central bank, the decline in the foreign exchange reserves came due to external debt repayment.

Overall, the liquid foreign exchange reserves held by the country, including the net forex reserves held by the commercial banks, stood at $11.42 billion. The net foreign exchange reserves held by the commercial banks amounted to $5.84 billion.

An analyst at Topline Securities said that the market gained 1.77 per cent on a weekly basis, owing to expected resolution of the gas circular debt, as the government has shown interest to curtail the debt in line with the IMF demands.

“The major news during the outgoing week included consumer price index (CPI) clocking-in at 24.5 per cent in December 2022, compared with 23.8 per cent during the previous month. The trade deficit for December also showed an increase of 2 per cent to reach $2.9 billion,” he added.

However, Pakistan’s trade deficit declined 32.65 per cent to $17.13 billion during the first half of the fiscal year 2023, compared with $25.43 billion during the same period of the last year, the data released by the Pakistan Bureau of Statistics (PBS) showed.

The exports also slumped for the fourth consecutive month in December 2022 to $2.3 billion, down 3.64 per cent, compared with the exports of $2.39 billion in November 2022.