Pakistan Stock Exchange index up 3.20%WoW

The week ended on August o4, 2023 started on a very optimistic note, with the market up 958 points on Monday and closing at 48,035 points by day end. This was mainly driven by the central bank decision to keep policy rate unchanged at 22% despite the market expectations of an increase.

Moreover, positive sentiments encircling Finance Ministry’s expectations of eased out inflation during July and to stay within 25-27% further contributed to market being optimistic on Monday. On the contrary, CPI figures announced on Tuesday materialized to 28.3%YoY and negated the original statement made by the Finance Ministry.

Trade deficit decreased to US$1,607 million in July 2023 from US$1,863 million in June 2023.

The index remained on upward trajectory on Wednesday to close at 48,765 points and then cascaded again to 48,611 points after staying volatile on Thursday.

Overall, the benchmark index ended gaining 1,509 points or 3.20%WoW during the week and closed at 48,586 points while transcending to 48,765 points on Thursday.

The market capitalization this week was PKR7.290 trillion increasing from PKR7.097 trillion a week ago.

Average daily turnover spiked to 391.82 million shares from 125.64 million shares a week ago, reflecting a sharp increase in market participation by 211.9%.

Foreign exchange reserves held by SBP decreased to US$8.154 billion from US$8.186 billion to and the total liquid reserves declined US$13.464 million from US$13.534 million as of July 27, 2023.

Other notable news for the week Were: 1) Prime Minister Shahbaz Sharif announced the dissolution of the National Assembly to take place on 9th August, 2) July textile exports declined 15%YoY to US$1.31 billion, 3) Pakistan Stock Exchange (PSX) got ready  for Symmetry Group’s IPO, 4) Chinese Exim bank rolled over US$2.4 billion which are due in next 2 fiscal years, 5) July cement dispatches rise 57.44%YoY to 3.212 million tons, and 6) Senate passed a bill allowing the establishment of state-owned Pakistan Sovereign Wealth Fund.

Modarabas/ Sugar and Allied Industries/ Chemical have been worst performers, whilst Close-Ended Mutual Fund remained an anomaly.

Top performing scrips of the week were: HGFA, CNERGY, OGDC, POML, and THALL, while top laggards included: COLG, UBL, FABL, YOUW, and CEPB.

Flow-wise, major net selling was recorded by Mutual Funds with a net sell of US$5.97 million. Companies absorbed all of the selling with a net buy of US$8.82 million.

The market is likely to stay positive given the strengthening of macros and the receipt of Chinese loan rollovers worth US$2.4 billion. Market participants are advised to follow a cautious approach when investing while focusing on dollar denominated revenue stream companies like E&Ps and Technology to hedge against currency risk or in companies with healthy dividend yields.