KARACHI: The status quo in the SBP policy rate against the market expectation of a cut disappointed investors who resorted to profit-selling, dragging the index below the 71,000 level in the outgoing volatile week.

Arif Habib Ltd (AHL) said the index experienced persistent pressure throughout the week as the market anticipated a rate cut, which ultimately remained unchanged at 22 per cent. On the economic front, Pakistan received the last tranche of $1.1 billion under the IMF’s Stand-By Arrangement programme. Moreover, headline inflation in April clocked in at 17.34pc year-on-year (lowest since May 2022) compared to 20.7pc in March.

The trade deficit shrank by 17pc year-on-year for 10MFY24, settling at $19.5bn. Furthermore, during 3QFY24, the economy recorded its first negative primary balance of FY24, amounting to a deficit of Rs197bn.

Also, the government reduced petrol and diesel prices by Rs5.45 and Rs8.42 per litre. In addition, SBP foreign exchange reserves increased by $25m to $8.0bn in the week ending April 26. During the week, the rupee strengthened by 18 paise to Rs278.21 against the US dollar.

As a result, the benchmark KSE-100 index closed at 71,902 points after declining by 841 points or 1.16pc week-on-week.

Sector-wise, negative contributions came from technology and communication (276 points), fertiliser (256 points), commercial banks (201 points), pharmaceuticals (50 points), and chemicals (43 points). Meanwhile, the sectors that mainly contributed positively were oil and gas exploration companies (211 points) and oil and gas marketing companies (22 points).

Scrip-wise negative contributors were Engro Fertilisers Ltd (228 points), Systems Ltd (120 points), TRG Pakistan (118 points), UBL (96 points) and NBP (61 points). Meanwhile, scrip-wise positive contributions came from Pakistan Petroleum Ltd (217 points), Bank Al-Habib Ltd (73 points), Bank Alfalah Ltd (46 points), Sui Northern Gas (37 points) and OGDC (25 points).

Foreigner buying continued during the outgoing week, clocking in at $8.0m compared to a net $3.0m last week. Major buying was witnessed in fertiliser ($3.3m) and commercial banks ($2.3m). On the local front, selling was reported by other organisations ($5.6m), followed by individuals ($1.8m).

The average trading volume plunged 21pc to 516m shares while the average value traded settled at $86m.

AHL said that with anticipation building around positive advancements in the new IMF programme, the market is poised to maintain a positive trajectory in the upcoming week.

This anticipation is set to buoy market sentiment and bolster investor confidence. Moreover, the allure of stocks trading at attractive levels is expected to serve as an additional catalyst, potentially enticing further investor participation.

However, AKD Securities Ltd said market volatility will persist until discussions regarding the budget and IMF are settled. It advised investors to focus their investments on fundamentally strong companies.

Published in Dawn, May 5th, 2024