KARACHI: The stock market managed to post meagre gains despite political and economic uncertainties during the outgoing week.

The PSX suffered a massive loss of 1,142 points or 1.49 per cent in the first session, which was in line with the global downturn. Wall Street stocks deepened their losses, and the Japanese market had its worst day in 13 years as panic spread across trading floors over fears of a recession in the United States.

Arif Habib Ltd (AHL) said the market faced pressure from investors, who were selling in line with the rout in the equities market across the globe. However, in a critical economic development, Pakistan secured one-year debt rollover commitments from key lenders, a crucial step before the final approval of the 37-month $7 billion Extended Fund Facility from the International Monetary Fund, boosting market sentiments.

Additionally, the government raised Rs355bn through a T-bill auction, reducing yields by 52 basis points (bps) for three months, 54bps for six months, and 50bps for 12-month T-bills. The Karachi interbank offered rates also fell across all tenors, hitting an 18-month low, with decreases ranging from 2 to 40bps day-on-day.

Furthermore, the State Bank of Pakistan’s foreign exchange reserves increased by $51 million to $9.15bn week-on-week for the period ending on Aug 2. The rupee, however, depreciated against the dollar by five paise to Rs278.5.

A positive sign for the government amid ongoing political and economic uncertainties was a massive increase in remittances, soaring 48pc in July compared to the same month a year ago. Inflows reached $2.995bn, up from $2.029bn in July 2023.

However, despite the year-on-year growth, the inflows were down by $153 million compared to June, when remittances totalled $3.158bn.

As a result, the benchmark KSE 100-share index settled at 78,569.59 points after gaining 344 points or 0.4pc week-on-week.

Positive contributions sector-wise came from exploration and production (614 points), tech (84 points), oil and gas marketing companies (51 points), food and personal care products (22 points), and leather and tanneries (9 points).

Meanwhile, the sectors that mainly contributed negatively were fertiliser (155 points), power generation and distribution (103 points), refinery (33 points), cement (32 points) and chemical (23 points).

Scrip-wise positive contributors were Mari Petroleum (447 points), Oil and Gas Development Company (109 points), United Bank Ltd (97 points), Meezan Bank Ltd (77 points) and Systems Ltd (62 points).

Meanwhile, scrip-wise negative contributions came from Fauji Fertiliser Company (236 points), Bank Al-Habib Ltd (167 points),

Hub Power (93 points), Askari Bank (30 points) and Colgate Palmolive (26 points).

Foreign buying clocked in at $1.4m against a net sell of $2.2m the preceding week. Major buying was witnessed in banks ($0.9m) and technology ($0.6m). On the local front, selling was reported by mutual funds ($7.1m), followed by companies ($1.6m).

The average trading volume soared 38pc to 493m shares, while the traded value swelled 21pc to $74m week-on-week.

According to AHL, the market will likely maintain a positive trajectory in the coming week, buoyed by the ongoing corporate results season. Additionally, the MSCI review next week may increase Pakistan’s weight in the Frontier Market space, potentially providing further momentum for the benchmark index.

AKD Securities Ltd said the market is expected to continue its positive momentum as global market concerns settle and macroeconomic indicators remain favourable. Sectors benefiting from monetary easing and structural reforms will remain in the limelight. However, modest economic recovery will keep the upside in check for the cyclicals.

Published in Dawn, August 11th, 2024