Pakistan Stock Exchange: Investors remain on sidelines

During the week ended on October 21, 2022, the focus of investors remained on the current account position, besides the upcoming FATF plenary. The benchmark index remained flat and closed at 42,213 points, up 0.6%WoW. The average volume for the index continued downward trajectory, dropping to 228 million shares down 14.4%WoW.

Major news flows during the week included: 1) Q1FY23 Current Account deficit down by 37%YoY, 2) Trade deficit shrinks by 30.2%YoY in September, 3) Gas sector circular debt bloats to Rs1.5 trillion, 4) Pakistan receives only US$88 million assistance against US$816 million flash appeal, 5) Pakistan seeks rescheduling of US$27 billion debt and vi) country’s foreign exchange reserves inches up to US$13.250 billion.

The top performing sectors were: Tobacco, Close-end Mutual funds, Synthetic & Rayon, Modarabas and Power Generation & Distribution, while the least favorite sectors were: Woolen, Textile Weaving, Sugar & Allied Industries, Oil & Gas Marketing and Automobile Parts & Accessories.

The top performing scrips in the KSE-100 were: PAKT, HGFA, PGLC, SNGP and AKBL, while laggards included: BNWM, SHEL, HCAR, NRL and SRVI.

Foreigners emerged the biggest sellers, offloading US$3.4 million followed by Banks & DFI (US$1.5 million), Mutual funds (US$1.3 million), Companies (US$0.4 million) and Other Organizations (US$0.2 million). While Individuals, Brokers and Insurance Companies were on the buying side, with a net buy of US$5.4 million, US$0.9 million and US$0.6 million respectively.

Amid the volatile local political situation, the name of the game is waiting and seeing. If the political turmoil dampens, some may view it as a bull-trigger for the market, while the potential of anarchy may keep some away. Moreover, with the outcome of the FATF plenary scheduled to be announced on Friday night, the result will boost/suppress the market.

It is likely that the country will be removed from the grey list of the global money laundering and terrorism financing watchdog, which will in turn increase the flows of foreign funding into the equity market.

The PKR continued its decline which started last week and lost 1.1%WoW owing to the speculation regarding changes in the Finance Ministry. Keeping in view the uncertainty, near-term outlook for the equity market remains hazy as both bear and bull-run triggers loom overhead.