Pakistan Stock Exchange benchmark index posts 1.74%WoW increase

Pakistan Stock Exchange witnessed an overall volatile week as the political instability raged on, dampening investors’ confidence. Participation in the market remained lackluster, with daily trading volume averaging 240 million shares. The benchmark Index gained 716 points during the week ending November 04 2022, depicting a 1.74%WoW rise in the index.

The PKR continued to lose value against the US$, depreciating by 0.25% over the course of the period. CPI once again came in higher on Wednesday, rising to 26.56%YoY for October 2022 as spikes from the unwinding of relief from fuel tariff adjustments and rising food prices impacted. Trade deficit for October 2022 was reported at US$2.3 billion, down 42%YoY. Foreign exchange reserves held by SBP were reported at US$8.9 billion on October 28, 2022.

On the international front, US FED increased its rates by 75bps on Thursday, which pushed the oil
back, as the global commodity continued to rage upwards due to lower than expected US inventory data and reports of Chinese pullback on COVID curbs.

Other major news flows during the week were: 1) Prime Minister Shehbaz Sharif on Monday announced Rs1,800 billion relief package for farmers, 2) PM arrived in Beijing on Tuesday to meet Chinese leaders and discuss plans for the China Pakistan Economic Corridor (CPEC), 3) The country's power sector's circular debt is reportedly touching PKR2.6 trillion mark at present as against PKR2.252 trillion at the end of last financial year, 4) Former Prime Minister Imran Khan was shot in the shin on Thursday when his anti-government protest convoy came under attack in the east of the country in what his aides said was a clear assassination attempt.

Company-wise, amongst main boards, BNWM, TRG and SNGP companies were amongst the top performers. AICL, NESTLE and IGIHL were amongst the worst performers.

Flow wise, substantial net selling was recorded by Insurance companies and Mutual funds totaling US$4.63 million. Individuals absorbed most of the selling with a net buy of US$4.68 million.

Top performing sectors were: Wollen, Tobacco, OMCs, Tech & Communication and Sugar, while laggards included: Vanaspati, Food & personal care, Leasing, Investment Banks/Investment Companies and Commercial Banks.

The market is expected to remain range-bound in the near future, as pressure on the PKR continues to be a cause of concern. The long march, and the ensuing political uncertainty, is expected to keep market movement in check. Moreover, the economic slowdown in the country, an intended outcome of the SBP's contractionary policies and the adverse effects of the floods are likely to keep corporate earnings subdued going forward. Analysts advise investors to remain cautious while building new positions.