KARACHI: The stock market remained in the green zone during the short week due to a new loan deal with the International Monetary Fund (IMF). Following the apex court’s ruling on reserved seats and the government’s defiance to comply with the directions, political uncertainty has been growing, which has worried market players. As a result, many investors opted to take profits in the last session.

Meanwhile, economic uncertainty is growing as trade and industry leaders nationwide have urged the government to review the agreements with independent power producers. They argue that the current capacity payments are unjust and illogical, leading to high electricity costs and making it nearly impossible for businesses to operate.

They complained that the government has already raised the base electricity tariff to an unprecedented level under the IMF conditions to secure a new loan deal, crucial for the country to meet its debt obligations in the current fiscal year, at the cost of slowing business and economic activities.

Arif Habib Ltd (AHL), in its market commentary, said the market showed positive momentum in the three-day trading week, driven by the reaching of a Staff-Level Agreement (SLA) with the IMF for a new 37-month Extended Fund Facility amounting to $7 billion.

Optimism about the economic outlook following the IMF pact pushed the index to an all-time high of 81,839 points on Thursday. However, political noise wiped out most of the gains made during the week, resulting in the index shedding 1,722 points on the last working day.

On the economic front, the current account deficit narrowed by 79 per cent to $700 million in FY24, the lowest in 13 years. In addition, Large-Scale Manu­facturing output expanded by 7pc year-on-year in May. The State Bank of Pakistan’s foreign exchange reserves inched up by $19m to $9.4bn week-on-week during the period ending on July 12. The rupee appreciated against the US dollar by 27 paise or 0.1pc to Rs278.13.

As a result, the benchmark KSE 100 index settled at 80,118 points after gaining 174 points or 0.22pc week-on-week.

Sector-wise, positive contributions came from E&Ps (207 points), technology and communication (103 points), fertiliser (83 points), cement (83 points), and automobile parts (57 points). However, the sectors that mainly contributed negatively were power (249 points), tobacco (51 points), engineering (47 points), pharmaceutical (45 points), and banking (41 points).

Scrip-wise positive contributors were Pakistan Oilfield Ltd (129 points), Engro Corporation (126 points), MCB Bank (115 points), United Bank Ltd (79 points) and Lucky Cement (68 points). Meanwhile, scrip-wise negative contributions came from Hub Power (155 points), HBL (91 points), Fauji Fertiliser Company (73 points), National Bank of Pakistan (63 points) and Packages Ltd (61 points).

Foreigner buying continued, clocking in at $9.3 million compared to a net buy of $4m the preceding week. Major buying was witnessed in ‘all other sectors’ ($5.2m) and technology ($2m). On the local front, selling was reported by insurance companies ($7.7m), followed by companies ($4.4m).

The average trading volume rose 5.6pc to 464m shares, while the average value traded surged 29.2pc to $96m week-on-week.

During the week, the government raised petrol and diesel prices by Rs9.99 and Rs6.18, drawing a strong reaction from trade and industry, who were already crying for revisiting high energy prices, especially electricity and natural gas.

According to AHL, the market will stay positive as it anticipates the IMF Executive Board’s approval and the disbursement of the first tranche of the new programme. Additionally, the market will closely monitor the start of the results season next week.

AKD Securities Ltd, however, noted that escalating political tensions could dent investors’ sentiment. Meanwhile, market participants will focus on upcoming corporate results, inflation figures, and the next MPC meeting.

Published in Dawn, July 21st, 2024