Islamabad, Oct 20: PSX Closes Week in the Red despite Reaching Record Highs. Despite reaching an all-time high in the middle of the week, the stock market was flat and reported a slight loss in the previous week.
Due to growing political tensions and PTI protest calls, the market lost money during the first session. Investor confidence was regained on Wednesday, however, as the index rose above 86,000 following the calm end of the 26th Shanghai Cooperation Organization (SCO) meeting, which raised expectations for political and economic stability in the area.
The government’s announcement to release unpaid invoices to five independent power producers (IPPs) from the 1994 policy and to provide 18 IPPs from the 2002 power generation policies four “take-and-pay” alternatives further fueled the rally.
Despite a sequential improvement of 4.7 percent month-over-month, Arif Habib Ltd (AHL) stated that the index was unable to maintain gains above 86,000 and fell in the following session as a result of a 2.66 percent contraction in the Large-Scale Manufacturing Index (LSMI) production.
Furthermore, Pakistan’s trade imbalance increased to $1.8 billion in September, a 24 percent year-over-year increase. All tenors experienced a steep reduction in yields during the recent PIB auction, with the two-year bond seeing a notable 74bps drop.
Additionally, the State Bank of Pakistan’s (PSX) foreign exchange reserves increased by $215 million in the week ending October 11 to surpass $11 billion, the highest level in almost three years. Despite the recent increase in reserves, the currency remained unchanged, slipping two paise to Rs277.6 because the central bank did not reveal the source of the influx.
Consequently, the benchmark KSE 100 index lost 233.3 points, or 0.27 percent, week over week and ended the week at 85,250 points. Commercial banks (293 points), power generation (131 points), fertilizer (95 points), cement (65 points), and paper and board (28 points) were the sectors with the lowest contributions.
Refineries (93 points), tobacco (82 points), engineering (65 points), pharmaceuticals (49 points), and automakers (34 points) were the industries that made the biggest positive contributions. Pakistan Oilfield (180 points), Hub Power (142 points), MCB Bank (134 points), United Bank Ltd (119 points), and Engro Corporation (108 points) were the scribes’ top contributors.
In the meantime, Mari Petroleum Ltd (173 points), Attock Refinery Ltd (101 points), Pakistan Tobacco Company (82 points), Fauji Fertilizer Company (65 points), and Indus Motor (58 points) all made positive contributions in terms of scrip.
In contrast to previous week’s net sell of $22.6 million, foreigner selling continued to clock in at $11.6 million. Fertilizer ($1.6m) followed by “other sectors” ($7.4m) saw significant selling. Locally, businesses reported purchasing mutual funds ($7.6m) after purchasing $25.8m.
The average value fell by nearly a quarter to $81 million week over week, while the average trading volume fell 15.5 percent to 442 million shares. AKD Securities Ltd. predicts that the market will probably continue to rise in the future due to falling interest rates, which are expected to keep directing investment flows into stocks.
Additionally, the ongoing earnings season would keep corporate results front and center. With a price-to-earnings ratio of 3.7x and a dividend yield of 11.9pc, the market is still reasonably valued despite the recent upward trend.
