PSX weekly review: KSE-100 gains despite dull trading

• KSE-100 index gains 126 points to close the week at 42,140.76 points.
• Lack of positive triggers dimmed investor sentiments.
• "We expect the market to remain positive in the coming week," AHL predicts.

KARACHI: The Pakistan Stock Exchange (PSX) experienced sombre trading in the outgoing week as a lack of positive triggers dimmed investor sentiments and forced market players to remain on the sidelines.

Resultantly, the KSE-100 index gained 126 points, or 0.3%, to close the week at 42,140.76 points.

Trading during the past week kicked off on a negative note amid concerns over the dissatisfaction expressed by the International Monetary Fund (IMF) upon measures taken in the federal budget for 2022-23, whereby the market plunged by 1,135 points day-on-day.

Read more: Weekly inflation spikes to 14-year high

After the bloodbath, the market sentiment turned positive amid the expectation of the exit of Pakistan from the Financial Action Task Force’s (FATF) grey list. 

Moreover, the investors remained elated owing to the news flow regarding China agreeing to roll over loans worth $2.3 billion to Pakistan and extending further assistance by $2.5 billion to $2.8 billion.

Furthermore, the government increased the prices of petrol and hi-speed diesel by Rs24.03 per litre and Rs59.16 per litre, respectively, while completely eliminating the remaining subsidies, fulfilling one of the major conditions of IMF.

However, the Pakistani rupee continued to plummet throughout the week against the US dollar, closing at an all-time low of Rs208 while State Bank of Pakistan’s (SBP) reserves dropped to a staggering $8.99 billion.

Read more: Breakthrough expected in Pakistan-IMF talks 'in 72 hours'

Other major developments during the week were: National Electric Power Regulatory Authority (NEPRA) approved Rs1.55 per unit hike for Discos, textile exports surged by 28.6% in July-May FY22, Oil and Gas Development Company discovered gas reserves in Sindh, and banks disbursed over Rs1 trillion agri credit during July-April period.

Meanwhile, foreign selling this week clocked in at $1.91 million against a net sell of $0.42 million recorded last week. Selling was witnessed in banks ($1.4 million), and fertiliser ($1.1 million).

On the domestic front, major buying was reported by companies ($10.5 million), followed by individuals ($5.8 million).

During the week under review, average volumes clocked in at 174 million shares (up by 3% week-on-week), while average value traded settled at $25 million (up by 16% week-on-week).

Major gainers and losers of the week

Sector-wise positive contributions came from exploration and production (+116 points), cement (+90 points), oil marketing companies (+80 points), power generation (+56 points), and engineering (+51 points). On the flip side, negative contributions came from commercial banks (-263 points), chemical (-34 points), and technology (-33 points).

Explainer: What will it mean for Pakistan to be removed from the FATF grey list?

Scrip-wise major gainers were Hubco (+51 points), Pakistan State Oil (+50 points), Pakistan Oilfields (+36 points), Pakistan Petroleum Limited (+32 points) and Oil and Gas Development Company (+31 points). Meanwhile, major losers were UBL (-75 points), Meezan Bank (-71 points), Bank AlHabib (-46 points), MCB (-44 points), and Standard Chartered Bank (-34 points).

Outlook for next week

A report from AHL predicted: “Pakistan has fulfilled all its requirements to enter into the IMF programme (elimination of petroleum subsidies, hike in electricity tariff and budgetary measures) and the government is opting to further expand revenue measures, with which agreement with the IMF for the $1 billion loan tranche is expected to materialise.”

“Hence, we expect the market to remain positive in the coming week. However, continuous depreciation of Pakistani rupee against the greenback will raise concerns over inflation,” it said.

“The KSE-100 is currently trading at a PER of 4.2x (2022) compared to the Asia-Pacific regional average of 11.8x while offering a dividend yield of 9.4% versus 2.8% offered by the region,” the brokerage house stated.