Participation in the market remained lackluster, with daily average trading volume at 159.58 million shares, as compared to 186.3 million shares traded in the earlier week.
All eyes had been on the Monetary Policy announcement scheduled for Friday; the State Bank of Pakistan (SBP) decided to increase the policy rate 100bps to 16%.
Other major news flows during the week were: 1) Pakistan’s
foreign exchange reserves declined by
US$134 million to US$7.8 billion, 2) fertilizer offtakes plunged by 50.3%YoY in
October, 2022, 3) revenue collection target for December 2022 set at PKR 965 billion,
4) FDI dropped 52% to US$348 million during first four months of current
financial year, 5) World Bank approved soft loan of US$200 million for Pakistan
for green project, 6) Credit default swap shoots up to 92.53% on political
unrest and 7) SBP failed in setting up US$400 million oil fund.
The top performing sectors were: Jute, Technology & Communication and Transport, while the least favorite sectors were: Power generation & distribution, Vanaspati & Allied Industries and Cable & Electrical.
Stock-wise, top performers were: INDU, SYS, ENGRO, DAWH and PSEL, while laggards included: HUBC, MUREB, FCEPL, FATIMA and KEL.
Flow wise, Individuals were major buyers with net buy of US$4.8 million, followed by Foreign Investors (US$1.1 million), while Mutual Funds were major sellers during the week, with a net sell of US$2.8 million. Insurance continued to be a seller, with a net sell of US$1.4 million during the week.
The market is expected to remain range-bound in the near future. The 100bps increase in policy rate announced on Friday does not bode well and likely to dampen the outlook for equity markets.
Furthermore, the upcoming maturity of the International
Sukuk of US$1 billion will be in focus, with a positive outcome possibly
restoring sentiment regarding Pakistan's external position that would follow
the same.
Any development regarding the 9th review by the IMF would remain in the limelight. The market could come under further pressure due to political uncertainty from the continuing long march slated to reach Rawalpindi by November 26, 2022.
Analysts advise clients to stay cautious while building new positions in the market.
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