The stock market is likely to move in tandem with the daily number of coronavirus cases and the upcoming major show of opposition parties next week.
With an average of 3,000 new COVID-19 cases being reported daily, around 7 percent of tests are coming back positive. Although the stock market rebounded in the past week, the rise in COVID-19 cases may dampen investor sentiment.
Adding to the stock market’s uncertainty, the Pakistani Democratic Movement (PDM)—an alliance of 11 opposition parties—has announced a rally for December 13, 2024, despite the government’s ban on public gatherings to curb the pandemic. This political uncertainty could further affect investor confidence.
Analysts at Topline Securities noted that the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) closed up by 3.4 percent on a week-on-week (WoW) basis. Key events during the outgoing week influenced the stock market movements:
1. The Special Assistant to the Prime Minister (SAPM) hinted at a possible downward revision of the revenue collection target of Rs 4.9 trillion for FY21.
2. The federal cabinet approved Memorandums of Understanding (MoUs) signed between four dozen Independent Power Producers (IPPs) and the Government of Pakistan, which are set to be converted into agreements.
3. Fitch Ratings forecasted real growth for Pakistan at a meager 0.8 percent for FY21.
4. The Cabinet Committee on Energy (CCoE) approved the supply of electricity to the textile sector at 7.5 cents per kilowatt-hour (kWh) for two months starting December 1, 2024.
5. The Consumer Price Index (CPI) for November 2024 came in at 8.3 percent year-on-year (YoY).
6. Hub Power Company (HUBC) offered the federal government to buy out its Balochistan plant for Rs 65 billion.
7. The Securities and Exchange Commission of Pakistan (SECP) approved an initiative to enable all Pakistani resident and non-resident investors to open online accounts in the capital market.
8. The State Bank of Pakistan (SBP) reported a decline in reserves by $305 million to $13.11 billion.
In the past week, foreigners, companies, and banks were net sellers of equities worth $30.02 million, $7.11 million, and $4.74 million respectively. In contrast, individuals, brokers, insurance companies, and mutual funds were net buyers, purchasing $20.78 million, $8.07 million, $7.79 million, and $5.37 million worth of equities, respectively.
The interplay between rising COVID-19 cases and political developments will be crucial in determining the stock market’s direction in the coming weeks. Investors will be closely monitoring health statistics and political events to gauge stock market sentiment and make informed decisions.