Pakistan Stock Exchange (PSX) exhibited a bullish trend during the outgoing week as the KSE-100 index broke through the psychological barrier of 80,000 points to reach a record high over optimism that Pakistan had taken all the required measures for securing a new assistance package from the International Monetary Fund (IMF).

Investor sentiment was also bolstered by many positive economic developments such as a $494 million increase in State Bank’s foreign currency reserves that reached a nearly two-year high, 12% reduction in Pakistan’s trade deficit for fiscal year 2023-24 and stable rupee.

Expectations of handsome dividend payouts ahead of the corporate earnings season also kept investors in high spirits, which resulted in gains of over 1,750 points during the week. However, concerns that global indices provider FTSE Russel would downgrade Pakistan to the frontier market status and consolidation around 80,000 levels prevented market players from further building their positions.

Day-to-day movement showed that the KSE-100 index kicked off the week on a promising note with gains of nearly 380 points, influenced by economic developments and sector-specific news.

Next day, it displayed a significant bullish momentum ahead of the corporate earnings season and owing to the modest Consumer Price Index (CPI)-based inflation rate of 12.6% year-on-year for June 2024.

The bourse marked a historic day on Wednesday when it broke record and crossed the 80,000 mark, buoyed by expectations of handsome dividend payouts and clinching a loan deal with the IMF in about a month. The following day, the market closed slightly in the green despite facing mid-session pressure as investors awaited a staff-level agreement with the IMF following hints that all requirements had been met in the federal budget.

PSX concluded the week on Friday with thin losses over concerns that FTSE Russel would downgrade Pakistan to the frontier market status and due to consolidation around 80,000 levels.

The benchmark KSE-100 index closed the week at 80,213 points, with an increase of 1,768 points, or 2.3% week-on-week (WoW).

JS Global analyst Shagufta Irshad, in her report, wrote that the KSE-100 index reached another milestone of 80,000 points, reflecting weekly gains of 2.3%.

Market capitalisation of the KSE-100 rose 2% WoW. Average daily volumes increased 24% WoW while average daily traded value rose 31% in terms of US dollars, she said.

Foreign investors purchased $7.7 million worth of equities whereas mutual funds were net sellers of $13.6 million.

The CPI for June 2024 came in at 12.6%, taking the average inflation for FY24 to 24%. Meanwhile, the State Bank’s reserves reached a 23-month high of $9.4 billion, providing import cover for two months. It was attributed to significant official inflows from multilateral agencies.

Moreover, she said, the Federal Board of Revenue collected Rs9.3 trillion in taxes, missing the initial target by Rs109 billion. In addition, the government increased petrol price by Rs7.5 per litre and high-speed diesel price by Rs9.5 per litre.

Separately, the Oil and Gas Regulatory Authority announced a 9% hike in gas prices for captive power plants while keeping tariffs for other segments unchanged.

Also, the government raised power tariff for domestic consumers by 51%, removing obstacles in the way of a new IMF deal. An IMF delegation is expected to visit Pakistan in the second week of July to discuss terms of the loan agreement, the JS analyst added. Arif Habib Limited (AHL), in its report, commented that the outgoing week marked the commencement of the new fiscal year, where market momentum remained bullish and for the first time it closed above the 80,000 mark. On the economic front, Pakistan’s trade deficit decreased 12.3% year-on-year to $24.1 billion in FY24. The government’s debt as of May 2024 increased 2.6% month-on-month to Rs67.8 trillion while the Pakistani rupee depreciated Rs0.03, 0.01% WoW, and settled at Rs278.38 against the greenback, it said, added AHL.

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