Investors who were expecting a fall in the SBP policy rate were disappointed by the status quo, leading them to engage in profit-selling, which caused the stocks to drop below the 71,000 level during the previous week’s tumultuous events.
Arif Habib Ltd (AHL) stated that the market’s expectation of a rate cut—which ended up staying at 22 percent—put constant pressure on the index over the week. Regarding the economy, Pakistan was given the final $1.1 billion installment of the IMF’s Stand-By Arrangement program. In addition, headline inflation in April was 17.34 percent year over year, the lowest since May 2022, as opposed to 20.7 percent in March.
In 10MFY24, the trade deficit decreased by 17% on an annual basis to reach $19.5 billion. In addition, the economy had its first negative primary balance of FY24 during the third quarter of FY24, with a deficit of Rs197 billion.
Additionally, the government lowered the price of gasoline and diesel per liter by Rs. 5.45 and Rs. 8.42. Furthermore, in the week ending April 26, SBP’s foreign exchange reserves rose by $25 million to $8.0 billion. The rupee appreciated against the US dollar by 18 paise during the week, reaching Rs278.21.
Consequently, the benchmark KSE-100 index had a weekly decline of 841 points, or 1.16pc, and ended the week at 71,902 points.
The last week saw a continuation of foreign purchasing, totaling $8.0 million as opposed to a net $3.0 million the previous week. Fertilizer ($3.3m) and commercial banks ($2.3m) saw significant purchasing. Individuals ($1.8m) and other organizations ($5.6m) reported selling on the local front.
While the average traded value finished at $86 million, the average trading volume fell by 21% to 516 million shares.
As expectations for the new IMF program continue to rise, according to AHL, the market is expected to continue its upward trend this coming week.
This expectation should boost investor confidence and improve market mood. Furthermore, it is anticipated that the appeal of companies that are selling at favorable prices would operate as a further stimulant, possibly luring further investor involvement.
