KARACHI: Pakistan stocks likely to move with report of federal budget 2020-2023, which is scheduled to be presented on June 10, 2022.
Analysts at Arif Habib Limited said that the market is expected to remain range bound given Federal Budget 2022-2023 is anticipated to be announced on June 10, 2022.
READ MORE: Pakistan stocks plunge by 923 points on fiscal weakness
“The outcome of the budget presented will determine the market direction in the future,” the analysts said.
Moreover, the government may opt to roll-back the remaining subsidy on petrol and diesel next week, which may further ignite inflationary concerns.
All said, one positive development which market be looking forward to is the inflow from Chinese banks (about $2.3 billion) which, according to Finance Minister, is due shortly.
READ MORE: Stocks shed 518 points on monetary tightening concerns
The benchmark KSE-100 of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.1x (2022) compared to Asia Pacific regional average of 12.4x while offering a dividend yield of 9.6 per cent versus 2.7 per cent offered by the region.
Following the decision of partial removal of subsidy on petrol and diesel, increasing the prices by PKR 30/liter each, market commenced on a positive note this week on hopes of resumption of IMF as these measures are deemed to be a pre-requisite for the Fund’s approval for seventh review.
READ MORE: Pakistan stocks shed 322 points on budgetary concerns
As a result, Pak Rupee staged a recovery against the greenback (closing at PKR 197.92 this week). However, concerns over inflation (which reached a 28-month high of 13.8 per cent in May 2022) and uptick in government securities yields in T-Bill auction, dampened the sentiment at the index.
Moreover, the jump in National Saving Schemes (NSS) rate (150bps) and the expected hike in power prices (PKR 7.91/unit) sent alarm bells ringing.
Meanwhile, the last trading saw panic at the local bourse after Moody’s Investors Service downgraded Pakistan’s outlook from stable to negative while the announcement of another PKR 30/liter fueled inflationary concerns.
READ MORE: Stocks remain range bound on high inflation concerns
The market closed at 41,315 points, shedding 1,547 points (down by 3.6 per cent) WoW.
Sector-wise negative contributions came from i) Commercial Banks (363 points), ii) Cement (309 points), iii) Fertilizer (163 points), iv) Technology & Communication (124 points), and v) Chemical (93 points).
Whereas, sectors which contributed positively was Vanaspati & Allied Industries (1 points). Scrip-wise negative contributors were LUCK (141 points), HBL (129 points), FFC (87 points), TRG (68 points) and EPCL (55 points). Meanwhile, scrip-wise positive contribution came from POL (13 points), ABOT (10 points), MARI (9 points), SCBPL (6 points) and COLG (6 points).
Foreign selling was witnessed this week, clocking in at $ 0.42 million compared to a net sell of $ 1.51 million last week. Major selling was witnessed in Banks ($ 4.2 million) and Cement ($ 0.4 million).
On the local front, buying was reported by individuals ($ 5.6 million) followed by Companies ($ 5.6 million). Average volumes clocked in at 210 million shares (down 25 per cent WoW) while average value traded settled at $ 30 million (down 23 per cent WoW).
