KARACHI
\nPakistan Stock Exchange (PSX) edged lower last week as market\u2019s expectation of a rate hike by up to 200bps in policy rate and mixed trends on the economic front weighed on stocks despite rupee\u2019s significant appreciation.
\nThe benchmark KSE-100 Index shed 259.97 points (-0.56 percent) on a week-on-week basis to close at 45,753.51 from 46,013.48 points. The index had gained 700.83 points (+1.55 percent) in the preceding week. However, the index has gained 4,300.53 points since the Staff Level Agreement (SLA) was signed with the International Monetary Fund (IMF) on June 30.
\nIn the coming week, the recent hike in the prices of petrol by Rs26.02 per litre and high speed diesel by Rs17.34 per litre may weigh on stocks. Moreover, expected hike in gas tariff to cut circular debt and the revision of federal and provincial development programmes to create additional fiscal space may move most of the stocks lower. The finance ministry has announced the restructuring of the Public Sector Development Programme (PSDP) in the coming days.
\nThe market started last week on a negative note ahead of the Monetary Policy Committee (MPC) meeting scheduled for September 14, and the KSE-100 Index shed 147.75 points on Monday and 357.34 points on Tuesday to touch the week\u2019s lowest closing at 45,508.39 points. The last treasury-bills auction on September 7 witnessed a sharp increase in the cut-off yields, reaching 24.5 percent, 24.78 percent, and 25.06percent for three, six, and 12 months respectively. This showed a rise of 162bps for 3 months and 213bps for 12 months as compared to the preceding auction held on August 23. This indicated that the market was pricing in a higher interest rate scenario in near future.
\nHowever, the bourse remained positive for the next three days and managed to erode some of the losses of the previous two sessions, with the KSE-100 Index gaining 82.53 points, 59.13 points and 103.46 points to close the week at 45,753.51 points. The sessions remained range-bound on Wednesday and Thursday and the market witnessed cautious trading sessions, as investors awaited the outcome of the MPC meeting which announced its decision after the closing of the bourse on Thursday.
\nThe market opened on a bullish note on Friday, hailing the MPC decision to keep the policy rate unchanged at 22 percent. A boost to the stocks was expected as the market had already adjusted itself for an interest rate hike. The benchmark index crossed the 46,000 points twice on Friday but both times it faced strong resistance and failed to sustain it.
\nThe major reason remained the foreign selling which started soon after the Supreme Court struck down some sections of the amendments made to the National Accountability Ordinance (NAO) 1999 by the previous government. The foreign selling during the week remained $9.7 million as compared to net buying of $0.6 million in the preceding week.
\nA positive factor for the market was rupee\u2019s consistent appreciation against the US dollar as the local unit appreciated in the interbank market for the second week in a row and surged by Rs6.10 while it surged by Rs2.52 in the preceding week. Similarly, the rupee in the open market closed the week in the range of 297-300 a dollar against its opening at 301-304. However, foreign exchange reserves held by the central bank fell by $140 million to $7.638 billion in the week ending September 8 due to external debt repayment.
\nAnother positive development was a decrease of 79 percent in the current account deficit on a year-on-year basis in August 2023, which shrank from $774 million to $160 million. Moreover, the inflow of foreign direct investment rose to $234 million during the first two months of the current fiscal year against $201 million inflows in the same months of the last financial year.
\nMeanwhile, the Sensitive Price Indicator (SPI) based inflation decreased by 0.25 percent for the week ended on September 14 for the first time after surging for seven straight weeks. Similarly, inflation on a year-on-year basis decreased to 26.25 percent from 26.32 percent recorded a week earlier.<\/p>\n","protected":false},"excerpt":{"rendered":"
KARACHI Pakistan Stock Exchange (PSX) edged lower last week as market\u2019s expectation of a rate hike by up to 200bps in policy rate and mixed trends on the economic front weighed on stocks despite rupee\u2019s significant appreciation. The benchmark KSE-100 Index shed 259.97 points (-0.56 percent) on a week-on-week basis to close at 45,753.51 from […]<\/p>\n","protected":false},"author":2,"featured_media":356629,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-356603","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n