With Pakistan's agenda yet to be included in the IMF board
meeting, authorities are focusing on fulfilling other external financing
requirements, with efforts including visit to China for possible debt
rescheduling, especially of power producers.
The Finance Minister engaged with global rating agencies,
Fitch and Moody's, aiming for a possible improvement in the country's credit
rating to facilitate capital raising through external sources.
In the last T-Bills auction, yields dropped by 30-56 bps,
indicating market expectations of a 50-100bps cut in the upcoming Monetary Policy
Committee (MPC) meeting on Monday. However, experts anticipate the MPC to
maintain the status quo due to the re-emergence of strong inflationary
pressures from food supply disruptions and recently announced revenue measures
in the FY25 budget.
The July 2024 inflation is expected to clock in at 10.96%YoY
as compared to 12.57%YoY in the preceding month. On the external front, foreign
exchange reserves held by the central bank declined by US$397 million to US$9.03
billion as at July 19, 2024.
With the said volatility in market, participation decreased
by 27.3%WoW, with the average daily traded volume falling to 337 million shares,
from 464 million shares a week ago.
On the currency front, PKR largely remained flat against the
greenback throughout the week, closing the week at 278.3/US$.
Other major news flows during the week included:1) Forex
reserves declined by US$369 millio, 2) Income estimates slashed to PKR9.1 trillion,
3) Auto financing registered downward trend for second straight year and 4) GoP
announced to pull out of fuel pricing process, giving OMCs free hand.
Leasing, Vanaspati & allied industries and Textile
spinning were amongst the top performers, while ETF’s, Inv. Banks/ cos., and
Jute were amongst the worst performers.
Major net selling was recorded by mutual funds with a net
sell of US$5.0 million. Foreigners and insurance co. absorbed most of the
selling with a net buy of US$4.6 million and US$4.4 million, respectively.
Top performing scrips of the week were: PAKT, GADT, JVDC,
FFBL and LCI, while laggards included: NCPL, NPL, KAPCO, INIL and FCEPL.
Going forward, market’s focus will primarily be on the MPC
meeting scheduled for Monday, with any rate cut to boost investor’s confidence
and draw increased attention to the cyclical sector.
Additionally, the anticipated approval from the IMF
executive board next month is likely to support bullish momentum.
Sectors benefiting from monetary easing and structural
reforms would remain in the limelight.
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