PSX gains 169 points on SBP chief’s statement

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KARACHI
The Pakistan Stock Exchange (PSX) turned positive after going down in early trade on Friday, with the benchmark KSE-100 Index shedding 169.48 points (+0.39 percent) to close at 43,900.68 points.
The market opened on a negative note and shed around 175 points before taking a turn that continued throughout the session.
The KSE-100 Index moved in a range of 447.14 points, showing an intraday high of 44,003.75 points and a low of 43,556.61 points. Among other indices, the KSE All Share Index gained 83.86 points (+0.49 percent) to close at 30,028.55 points, while KMI All Share Islamic Index gained 97.1 points (+0.45 percent) to close at 21,695.57 points.
A total of 336 companies traded shares in the stock exchange, out of them shares of 184 closed up, shares of 136 closed down while shares of 16 companies remained unchanged. Out of 92 traded companies in the KSE-100 Index, 53 closed up, 36 closed down and three remained unchanged.
The overall market volumes remained 252.05 million shares. Total volumes traded for the KSE-100 Index remained 105.08 million shares. The number of total trades remained 98,685, while the value traded remained Rs8.05 billion.
Among scrips, WTL topped the volumes with 29.22 million shares, followed by HUMNL (25.96 million) and TELE (17.47 million). Stocks that contributed significantly to the volumes include WTL, HUMNL, TELE, TRG, and BYCO, which formed around 39 percent of total volumes.
The major sectors taking the index toward north were cement, commercial banks, oil & gas exploration companies, and textile.
The major sectors taking the index toward south were technology & communication, and automobile assemblers.
According to experts, there has been improvement in volumes, though it remained lowest if compared with the last two days. They were optimistic that stability will return to the market gradually.
They said that the exchange rate is also showing stability, adding though it is falling, the speed is very slow.
They said that shares are available at attractive prices and long and medium term investors should move towards the market. They said that the statement of State Bank of Pakistan (SBP) Governor Reza Baqir that the central bank will pause interest-rate increases to preserve economic recovery supported the market.
In an interview with Bloomberg, Baqir said, “We are going to take a pause to first look at the effects of the tightening we have already done…Fiscal policy has been very complementary and is also withdrawing stimulus so a coordinated macroeconomic response, we think, will be number one to sustain recovery and keep inflation broadly in check.”
A wider current-account deficit, faster inflation and stronger economic growth are factors that could get the State Bank of Pakistan to resume its rate hike journey, he said. Despite the rate increases, Baqir expects the economy to grow 5% in the fiscal year ending June, after expanding 4% a year ago.
The SBP has raised rates by a cumulative 275 basis points in three moves since September to tame the region’s fastest inflation and check a larger-than-anticipated gap of $5 billion in the November print of current account — the broadest measure of trade. That’s taken a toll on the rupee, which has been the worst performer for the past six months among 13 Asian currencies tracked by Bloomberg. The pressure on the rupee is going to dwindle once demand drops, Baqir said.
Baqir said the extent of the weakening has been “overstated” and the pressure on the rupee will ease as demand for the dollar falls in the local market “The recent weakening of the rupee, which is about 10% since this calendar year, overstates the extent of the weakening because we transition from a fixed exchange rate to a market-based exchange rate system in June 2019,” he said.
He believed that this economic recovery and the global developments including recoveries around the world, and supply change disruption have caused a sharp hike in global commodity prices which has pushed up current account deficit as well as inflation in Pakistan. “We estimate the 60 to 70% increase in current account deficit is due to the global commodity prices,” he stated.