Pakistan Stock Exchange (PSX) continued its positive momentum and posted smart gains in the outgoing four-day trading week, buoyed by share buyback announcements, strong financial results and cherry-picking of stocks that had dropped to attractive valuations. The week began on Tuesday with a positive session on the back of share buyback announcements by Lucky Cement and Habib Bank sponsors coupled with robust corporate results.

Investor optimism continued on Wednesday as trade deficit shrank 39.6% year-on-year, giving a boost to buying activity at the bourse. However, the KSE-100 index endured mixed sentiment in a highly volatile session on Thursday when investors opted to book profits at attractive valuations. Things took a turn for better on Friday as the index gained over 100 points due to cherry-picking, though investor participation remained low. The KSE-100 index gained 661 points, or 1.6% week-on-week, and settled at 42,242 by the end of the week.

JS Global analyst Wasil Zaman, in his report, noted that the KSE-100 maintained its upward momentum during the outgoing week following dialogue between the government and the opposition on election date. Sector-wise, food (up 8% WoW) and cement (+6.6% WoW) stood out as the key outperformers while refinery (down 4% WoW) and fertiliser (-3.4% WoW) were the key underperformers. On the news front, Pakistan’s trade deficit data showed a further contraction of 43% month-on-month (MoM) to $829 million in April 2023 as administrative controls over imports remained intact. State Bank’s foreign currency reserves remained largely stable, declining by just $6 million to $4.5 billion and translating into an import cover of one month. Inflation numbers continued to climb up to 36.4% year-on-year in April 2023, mainly driven by food inflation. Cement dispatches touched a ninemonth low as they dropped 22% MoM to 2.95 million tons in April on the back of tough macro conditions.

Despite the sequential improvement of 6%, oil marketing companies’ sales were down 47% YoY in April and 24% YoY during 10MFY23. On the international front, the US central bank further raised interest rates, which touched a 16-year high, as it battled to contain inflation, the JS analyst added. Arif Habib Limited, in its report, said that the stock market commenced trading on a positive note on the back of robust financial results from major sectors. The announcement of share buyback by Lucky Cement (second buyback) and HBL’s sponsor further boosted sentiment, it said. Furthermore, the trade deficit reduced by 40% YoY at $24 billion in 10MFY23, which kept the bullish momentum in place. However, inflation for April 2023 came in at 36.4% YoY, a historic high. Moreover, Pakistani rupee appreciated by Rs0.25, or 0.01% WoW, and settled at Rs283.59 against the US dollar. The market closed at 42,242, gaining 661 points (or 1.6%) WoW.

In terms of sectors, positive contribution came from commercial banks (252 points), cement (247 points), fertiliser (67 points), food and personal care products (64 points), and paper and board (60 points). Negative contribution came from E&P (86 points), technology (51 points) and auto assemblers (36 points). In terms of individual stocks, positive contributors were Lucky Cement (167 points), Habib Bank (107 points), United Bank (94 points), Packages Limited (60 points) and Engro Fertilisers (53 points). Negative contribution came from Pakistan Petroleum (40 points), Systems Limited (34 points), Pakistan Oilfields (24 points), Indus Motor (22 points) and TRG Pakistan (17 points). Foreigners turned net sellers during the week under review as they sold stocks worth $6.1 million as compared to net buying of $14.2 million last week, the AHL report added.

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