Weekly Review: IMF talks, policy rate to move stock market

Weekly Review: IMF talks, policy rate to move stock market

KARACHI: The stock market likely to move on progress related to IMF talks and monetary policy announcement next week.

Analysts at Arif Habib Limited said that a key event in the immediate term is the expected resumption of the IMF program, which should propel the market as it would imply inflows from other bilateral and multilateral partners as well.

They also highlight the upcoming monetary policy announcement which is due on January 23, 2023, which can keep leveraged sectors under limelight.

READ MORE: Equities shed 423 points on uncertain IMF talks

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 3.7x (2023) compared to Asia Pac regional average of 12.1x while offering a dividend yield of 11.0 per cent versus 2.9 per cent offered by the region.

The week kicked-off on a negative note due to political chaos in the country as the Punjab assembly was dissolved over the weekend and subsequent dissolution of the KPK assembly was on the cards.

This uncertainty persisted throughout the week as resignations of members of a political party were accepted in the National Assembly and clarity was awaited on the confidence motion against Prime Minister.

On the economic front, remittances numbers released by the State Bank of Pakistan (SBP) depicted a decline of 19 per cent YoY in December 2022, compared to the same period previous year.

READ MORE: Pakistan stocks gain 40 points as IMF may resume talks

However, one positive development during the week was a slight jump in the State Bank of Pakistan’s reserves which were up USD 258 million WoW, reaching USD 4.6 billion.

Moreover, PKR depreciated by PKR 1.52 | 0.66 per cent WoW against USD, closing the week at 229.67. The index closed at 38,408 points, shedding 1,915 points (down by 4.8 per cent) WoW.

Sector-wise negative contributions came from i) Commercial Banks (356.5 points), ii) Cements (287.7 points), iii) Oil & Gas Exploration Companies (224.9 points), iv) Fertilizers (166.5 points) and v) Technology (163.9 points).

READ MORE: Pakistan stocks gain 449 points on central banks governor’s statement

Whereas, the sector which contributed positively was Real Estate Investment Trust (0.6 points). Scrip-wise negative contributors were LUCK (133.3 points), ENGRO (103.9 points), PSO (92.3 points), MARI (80.0 points) and BAHL (77.9 points). Meanwhile, scrip-wise positive contribution came from EFUG (3.2 points), FFC (1.4 points), DCR (0.6 points), and COLG (0.2 points).

READ MORE: Pakistan stocks nosedive by 1,378 points on economic upheaval

Foreigners buying continued during this week, arriving at USD 4.9 million compared to a net buy of USD 1.2 million last week. Major buying was witnessed in Exploration and Production (USD 1.4 million) and Commercial Banks (USD 1.2 million). On the local front, selling was reported by Banks/DFIs (USD 4.1 million) followed by Individuals (USD 3.0 million). Average volumes clocked in at 143 million shares (down by 22 per cent WoW) while average value traded settled at USD 21.7 million (down by 20 per cent WoW).