Daily average traded volume was reported at 131 million shares as compared to 161.7 million shares a week ago, down 19.0%WoW. The market performance has been characterized by the IMF’s disagreement over the federal budget, aggravated by Pakistan’s non-inclusion in the Fund’s board meetings up till June 29, 2023.
Although there are assurances from the Prime minister and other senior officials regarding a positive conclusion to the program, investor sentiments remain bearish.
Foreign exchange reserves held by State Bank of Pakistan (SBP) plunged to US$3.5 billion, excluding the refinanced US$300 million from China and absence of any bilateral flows owing to the stalled IMF program, exacerbating the already precarious situation. Pakistan faces US$10.35 billion debt obligation by the end of December 31, 2023. The exchange parity registered mild gains to close at PKR286.7 to US$.
Other major news for the week were: 1) FBR income tax collection was up 41.0%YoY surpassing the annual target of PkR3,026 billion ahead of FY23 close; 2) SBP mobilized PKR2.43 billion through T-Bills auction, at a flattish yield of 22.0%; 3) current account surplus was recorded at US$225 million for May 2023, as compared to a surplus of US$78 million in April 2023. The deficit for 11MFY23 narrowed by 81% due to curbed imports; 4) FDI declined by 21%YoY during 11MFY23 to US$1.32 billion. Total foreign investment nosedived 82.0%YoY to stand at US$294 million. However, US$149 million inflows were recorded in May 2023, depicting a 6.0%MoM increase in FDI; 5) external government borrowing of US$8.6 billion during 11MFY23 declined by 36.0%YoY.
Leasing Companies, Transport, and Glass & Ceramics have been the worst performers, whilst Tobacco remained the exception.
Major net selling was recorded by Brokers at US$7.7 million. Companies absorbed most of the selling with a net buy of US$10.5 million.
Top performers during the week were: SML, SHEL, PAKT, UPFL, and AGP, while top laggards included MTL, PGLC, YOUW, GATM, and PSMC.
Market is expected to remain range-bound owing to a lack of clarity on the IMF program, stalled bilateral flows amidst a burgeoning debt burden fueling the default risk. Analysts expect the market to react once NA finalizes the Finance Act for FY24, keeping in view proposals put forward by the Senate and other business bodies.
They reiterate their stance of following a cautious approach to stock picking and we continue to advocate dollar-denominated revenue stream scrips (Technology and E&P sector) to hedge against currency risk and high dividend yielding scrips.
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