KARACHI: Pakistan Stock Exchange witnessed a lackluster activity with low trading volumes during the outgoing week ended July 7, 2022 due to ongoing uncertainty regarding the announcement of Monetary Policy, rising political noise and inflation concerns. The benchmark KSE-100 Index declined by 286.34 points on week-on-week basis and closed at 41,344.01 points.
Trading activity remained very thin as average daily volumes on ready counter decreased by 54.6 percent to 90.21 million shares as compared to previous week’s average of 198.78 million shares while average daily traded value on ready counter declined by 51.3 percent to Rs 3.04 billion.
BRIndex100 lost 24.9 points on week-on-week basis to close at 4,092.92 with average daily trading volumes of 80.397 million shares.
BRIndex30 closed at 15,058.12 points, up only 1.64 points during this week with average daily turnover of 56.352 million shares.
Total market capitalization declined by Rs 21 billion to Rs 6.941 trillion.
An analyst at JS Global Capital said that the Pakistan equities closed the week on a negative note at 41,344, reporting a decline of 0.7 percent on week-on-week basis.
Key underperformers during the week were Refinery, Engineering and Fertilizer sectors. Investors remained on the sideline owing to lack of any positive trigger and further delays in IMF staff level agreement. Moreover, CPI for the month of June touched 13-years high of 21.32 percent on year-on-year basis against the market expectation of around 18 percent. Along with this, trade deficit for June-2022 touched 5 months high of $4.85 billion, up 34 percent on YoY and 20 percent on MoM, taking the FY22’s trade deficit to $48.35 billion, up 55 percent on YoY. An analyst at BMA Capital said that the outgoing week showcased lackluster activity in the KSE-100 Index, led by low volumes and muted investor’s interest.
This was primarily due to ongoing uncertainty regarding the MPC meeting, rising political noise and inflation concerns.
The week began on a negative note as CPI for June-22 clocked-in at 21.3 percent, a 14-year high. This instilled caution amongst investors who feared that the peak is yet to be achieved as further hikes in utilities are on the cards. The situation was further aggravated by uncertainty surrounding the IMF program based on rumours regarding further demands from the Fund in the form of reversal of NAB related amendments to counter corruption in the country and deregulation of POL prices to avoid political point scoring.
Despite assurances from the Finance Minister that the program is on track, market activity remained dull as broader economic concerns still persisted. The PKR also wiped off gains from the previous week to depreciate 1.5 percent during the week and closed at PKR 207.9 against the greenback.
The sentiment slightly improved due to highest tax collection by FBR for FY22 (Rs 6.1 trillion, up 25 percent on YoY) and welcome decline in international oil prices. However, growing recession fears weighed in on the local bourse amidst further monetary tightening, particularly in the West.
In light of these events, the market opined policy rate to go up by 50-100 bps in the MPC meeting to get closer to positive real rates. Subsequently, the SBP raised policy rate by 125bps (above market consensus) to 15 percent (highest since 2009), citing high inflation trajectory and a need to slow down domestic demand.
As for performance of the local bourse, the index moved between highs and lows of 41,686 points and 41,010 points respectively to conclude at 41,344 points (down 286 points or 0.7 percent on WoW).
Copyright Business Recorder, 2022
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