KARACHI: The outcome from the talks between the International Monetary Fund (IMF) and the authorities will set market direction during the next week.
Analysts at Arif Habib Limited said that the market participants will continue to closely monitor developments on IMF talks with Pakistan.
Any positive outcome on that front is likely to bring back bulls to the market. However, news flow regarding tough conditions may keep the index range-bound.
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The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 3.9x (2023) compared to Asia Pac regional average of 13.4x while offering a dividend yield of 10.5 per cent versus 2.8 per cent offered by the region.
The market remained range-bound during the week. The unfortunate incident in Peshawar, which caused concerns on the overall security situation in the country, took a toll on the index.
However, the commencement of talks between IMF and the government for 9th review in Islamabad brought back the bulls (which took the index up by 826 points during the intraday on Tuesday).
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On the economic front, PBS data unveiled during the week depicted a reduction in trade deficit by 22.7 per cent YoY | 6.9 per cent MoM. Meanwhile, the inflation for the month of Jan’23 reached 27.55 per cent (highest since 1975), which put pressure on the index.
Furthermore, the SBP reserves showcased a reduction of $592 million, to settle at $3.1 billion. Moreover, PKR depreciated by PKR 13.58 | 5.32 per cent WoW against USD, closing the week at PKR 276.58 (a historic low level). Albeit, the market closed at 40,471points, up by 21points | 0.05 per cent WoW.
Sector-wise positive contributions came from i) Power Generation & Distribution (101 points), ii) Fertilizer (79 points), iii) Automobile Assembler (38 points), iv) Cement (33 points), and iv) Pharmaceuticals (29 points).
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Whereas, the sectors which contributed negatively were i) Miscellaneous (245 points), Commercial Banks (39 points), and Technology & Communication (35 points). Scrip-wise positive contributors were HUBC (98 points), ENGRO (88 points), MARI (69 points), EFERT (48 points), and LUCK (47 points). Meanwhile, scrip-wise negative contribution came from PSEL (249 points), PPL (72 points), HBL (60 points), and FFC (57 points).
Foreigners buying continued this week, clocking in at $0.9 million compared to a net buy of $2.8 million last week. Major buying was witnessed in Fertilizer ($1.5 million) and E&P ($1.4 million).
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On the local front, selling was reported by Insurance ($9.7 million) followed by Mutual Funds ($1.6 million). Average volumes arrived at 135 million shares (down by 38 per cent WoW) while the average value traded settled at $23 million (down by 32 per cent WoW).
