Pakistan stock market closes almost flat

The week ended on August 11, 2023 started on a positive note, but faced volatilities as the week prolonged with the benchmark index closing the week at 48,424 points, reflecting a decrease of 0.33%WoW.

The average daily turnover clocked in at 287 million, down 26.9%WoW. The market capitalization dropped to PKR7,232 billion, from PkR7,290 billion.

Major drivers during the week remained multimillion investment commitments by GCC countries, UAE and Saudi Arabia and the triumphant oversubscription of MTBs much higher than the anticipated pre-auction target.

Furthermore, the total foreign exchange reserves witnessed a 0.9%WoWdecline, additionally workers’ remittances declined by 7.3%MoM and 19.3%YoY to US$2.03 billion in July 2023. Cumulatively remittances for 7MCY23 were reported at US$14.9 billion, down 16.9%YoY.

Other notable news from the week were: 1) CCoE approval for up-gradation for local refineries , 2) transfer of 15 companies to MSCI FM index from the small cap index, and 41 other companies were added to the small cap MSCI Index, 3) emergence of NBP, BoP and U bank as the top agri-microfinance creditors, 4) penetration of local rice traders into the global rice trade nexus as a result of restriction imposed by India on rice export, and 5) dissolution of the national assembly and anticipation of the caretaker govt.

Sector-wise, REFINERY declined by 11%, while INV. BANKS/ INV. COS/ SECURITIES COS. gained 8.3%.

Top performing scrips were: DAWH, AICL, FABL, UBL, and NATF, while laggards included PSMC, HCAR, CNERGY, SML, SEARL, and NRL.

BANKS/DFIs recorded a net sell of US$6.9 million. Insurance Companies absorbed all of the selling with a net buy of US$6.4mn.

The market is expected to portray positivity, while the installation of the caretaker government and the relation it fosters with IMF are likely to usher in market stability.

Despite a significant upside, market still remains attractive. Additionally, the influx of investments from UAE and Saudi can bolster and affirm stability.

Market participants are advised to implement 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.