KARACHI: The stock market commenced on a negative note in the outgoing week over concerns about new tax measures aimed at increasing revenue collection.

Arif Habib Ltd said the investor sentiment was revived after the State Bank of Pakistan (SBP) kept the policy rate unchanged. Moreover, the momentum gained further strength after Qatar announced its plans to invest $3 billion in various commercial and investment sectors. Meanwhile, Saudi Arabia also pledged an investment of $1bn.

However, the stock market turned negative again after the rupee depreciated against the dollar and closed the week at 220.66 points, down 2.8 per cent on a week-on-week basis.

Reserves held by the SBP fell by $87 million and settled at $7.8bn. With the anticipation of the re-imposition of sales tax on petroleum products, investors’ nervousness with regard to inflation resurfaced.

Hence, the benchmark index closed at 42,592 points, shedding 679 points or 1.57pc on a weekly basis.

Sector-wise, negative contributions came from banking (143 points), miscellaneous (138 points), power (101 points), oil marketing (80 points) and chemical (59 points).

Sectors that contributed positively were fertiliser (70 points) and cement (28 points).

Scrip-wise, negative contributors were Pakistan Services Ltd (137 points), the Hub Power Company Ltd (104 points), Pakistan State Oil Company Ltd (79 points), Habib Bank Ltd (48 points) and TRG Pakistan Ltd (48 points).

Meanwhile, positive contributions came from Lucky Cement Ltd (75 points), Systems Ltd (35 points), Tariq Glass Industries Ltd (26 points), Fauji Fertiliser Company Ltd (25 points) and Pakistan Oilfields Ltd (19 points).

Selling by foreign investors continued in the outgoing week and clocked in at $1.9m versus a net sale of $2.8m a week ago. Major selling was witnessed in commercial banks ($3.7m) and exploration and production ($0.7m).

On the local front, buying was reported by banks and development finance institutions ($4.1m) and individuals ($3.8m).

The average daily volume clocked in at 250m shares, down 52pc from a week ago. The average daily value traded settled at $37m, down 35pc on a weekly basis.

According to AKD Securities Ltd, the International Monetary Fund’s loan tranche of $1.2bn will unlock inflows from friendly countries and may lead to positive sentiments in the stock market.

The local currency is also expected to gain a better footing as the fall in foreign exchange reserves will get stopped as a result of the foreign inflows. “The ongoing results season will keep all eyes on the scrips yet to announce results, including heavyweights in the exploration and production sector,” it added.

But sentiments can be affected adversely with the economy slowing down as a result of the SBP’s contractionary policies as well as the floods across the country, it added.

Published in Dawn, August 28th, 2022