Pakistan Stock Exchange benchmark index posts 1.46%WoW increase

Pakistan Stock Exchange (PSX) posted somewhat lackluster movement during the week ended on September 22, 2023. It could be attributed to Monetary Policy announcement scheduled in the middle of the week, amidst dual fuel price hikes during the month. However, the decision of the central bank to keep the rates unchanged was a pleasant surprise.

On the external front, country’s foreign exchange reserves remained relatively flat, ending at US$7.69 billion as compared to US$7.64 billion a week ago. Additionally, the domestic currency continued to strengthen against the greenback.

Globally crude oil prices remained on upward trajectory, with Brent ending the week at US$94.03/bbl. This was largely driven by persistent supply cuts by major producers, namely Russia and Saudi Arabia. China’s economic recovery, provided further impetus.

Average daily trading volumes declined by 13.4%WoW, to 139 million shares, from 160 million shares traded during the earlier week.

The benchmark Index gained 6674 points posting a 1.46% increase in the index.

Other major news flows during the week included: 1) Caretaker setup increased prices of petroleum products, 2) foreign office termed report on Pakistani arms sale to Ukraine to secure IMF bailout ‘Baseless and fabricated’, 3) IMF expressed concerns over diesel smuggling from Iran and advised finance ministry to submit detailed report, 4) T-Bill yields tumbled despite the central bank mopping PKR2.4 trillion in the latest auction, and 5) GST evasion through flying invoices estimated around PKR6 trillion.

Transport, Leasing Companies and Close ended Mutual Funds were amongst the top performers, while Vanaspati and allied industries, Insurance and Automobiles were amongst the worst performers.

Major selling was recorded by Insurance (net sell US$1.3 million) and Brokers (net sell US$1.1 million).

Individuals and Other organizations absorbed most of the selling with a net buy of US$2.3 million and US$1.1 million respectively.

Top performing scrips of the week were: PGLC, LOTCHEM, UNITY, SCBPL, and GADT, while top laggards included: MUREB, UPFL, ATHL, PIOC, and MUGHAL.

 

Market is expected to be post gains in the coming week, driven by CPI readings alongside further clarity on IMF's upcoming review.

However, in the near term, appreciating PKR alongside expectations of higher remittances during September 2023 are expected to keep investors optimistic.

Overall, analysts continue to advise a cautious approach while building positions, with investments only focused on dollar-driven and high dividend-yielding companies.