PSX weekly review: Bears take centre stage at KSE-100 index

• Market ends three out of five sessions in loss.
• Declines comes due to rupee fall, political uncertainty.
• KSE-100 index closes week with a plunge of 1,998 points.

KARACHI: The bears held complete dominance at the Pakistan Stock Exchange (PSX) in the outgoing week as the market recorded declines in three of the five trading days owing to ambiguity over the final approval of the $6 billion International Monetary Fund (IMF) loan programme and deepening political uncertainty.

Market players were observed taking a cautious approach as economic and political uncertainty loomed following the by-polls and chief minister election in Punjab.

Rupee also started losing value against the US dollar in the week under review — closing at an all-time low of 228.37 — amid depletion of foreign reserves and uncertainty over funding from friendly countries which further accelerated the worries of investors and restrained them from assuming fresh positions.

Moreover, the IMF is assessing which friendly countries are willing to provide financial aid to Pakistan before disbursing the loan of $1.2 billion. Given the situation, the market felt pressure, taking the index below 40,000 points — the lowest level since November 2020 — on Thursday.

In addition to this, Fitch downgraded Pakistan’s rating outlook to negative.

Consequently, the benchmark KSE-100 index closed the week with a plunge of 1,998 points or 4.75% at the 40,077 point level.

Other major developments during the week were: foreign direct investment surged 2.6% in FY22 to $1.868 billion, SBP reserves fell to $9.329 billion on debt repayments, Pakistan international bond yields surged to 50.6%, large-scale manufacturing expanded 11.7% in 11MFY22, and Kohala Hydropower Project: PPIB extended due financial close date by three years.

Meanwhile, foreign buying this week clocked in at $3.43 million against a net sell of $1.40 million recorded last week. Buying was witnessed in technology ($1.98 million), and all other sectors ($0.75 million).

On the domestic front, major selling was reported by mutual funds ($7.76 million), followed by insurance companies ($2.22 million).

During the week under review, average volumes clocked in at 163 million shares (down by 8% week-on-week), while average value traded settled at $21 million (down by 31% week-on-week).

Major gainers and losers of the week

Sector-wise negative contributions came from commercial banks (-499 points), fertiliser (-294 points), cement (245 points), oil and gas exploration companies (-187 points), and power generation and distribution (-110 points).

On the flip side, positive contributions came from sugar and allied industries (+3 points), and close-end mutual fund (+2 points).

Scrip-wise major losers were HBL (-152 points), Lucky Cement (-92 points), Engro Corporation (-92 points), Engro Polymer and Chemical (-91 points), and Hubco (-90 points).

Meanwhile, major gainers were Shakarganj Limited (+3 points), HBL Growth Fund (+2 points), Highnoon Laboratories (+2 points), Murree Brewery Company Limited (+1 points), and Dolmen City REIT (+1 points).

Outlook for next week

A report from AHL predicted: “The market is expected to be positive in the upcoming week. With the commencement of result session next week, certain scrips are expected to remain in the limelight.”

“Moreover, scrips are trading at cheap valuations, which may revive the momentum. We recommend the investors to cherry-pick blue chip scrips,” it said.

“The KSE-100 is currently trading at a PER of 4.1x (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.