KARACHI: The Pakistan Stock Exchange (PSX) will remain closed next week due to a week-long holiday announced by the government for Eid ul Fitr celebrations. This decision will provide market participants with an extended break amidst the festive season.
During the outgoing week, the PSX demonstrated positive momentum. The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) recorded a robust increase of 2 percent on a week-on-week (WoW) basis, showcasing investor confidence and resilience.
Analysts at Topline Securities attributed this upward trend in the PSX to several significant economic developments. Key highlights from the week included:
1. Inflation Metrics: The Consumer Price Index (CPI) inflation for April 2021 was reported at 11.1 percent year-on-year (YoY), reflecting persistent inflationary pressures in the economy. This metric has a direct influence on the PSX as investors weigh its implications for monetary policy.
2. Trade Deficit Surge: The trade deficit expanded by 21.5 percent to $2.731 billion in April 2021. A widening trade deficit often impacts the PSX due to concerns over foreign exchange reserves and macroeconomic stability.
3. ECC Approvals: The Economic Coordination Committee (ECC) approved a payment of Rs89.86 billion as the first installment (40 percent) to 35 Independent Power Producers (IPPs). This move is expected to ease liquidity constraints and indirectly benefit the PSX.
4. Month-on-Month Trade Deficit Decline: Despite the YoY increase, the trade deficit for April 2021 clocked in at $2.994 billion, down 9 percent on a month-on-month (MoM) basis. Such fluctuations are closely monitored by stock market investors to gauge economic trends.
5. IMF Program Updates: Finance Minister Shaukat Tarin’s assurance that Pakistan will not exit the IMF program but will negotiate for relief on power tariff and taxes also influenced stock market sentiments positively.
The stock market’s performance during this period underscores the interplay between economic indicators and investor behavior. As the PSX remains closed for the upcoming holidays, market participants will likely analyze these developments to strategize their investments when trading resumes.