KARACHI: Despite receipt of the much-awaited first tranche of $1.03 billion following approval of the new 37-month $7 billion Extended Fund Facility by International Mon­etary Fund’s executive board on Sept 25, the benchmark KSE 100 index closed the outgoing week on a bearish note.

The market turned depressed primarily due to investors’ worries about the potential impact of stringent IMF conditions, which could lead to double-digit inflation in the current fiscal year due to heavy industrial taxation and expensive energy, the ending of subsidies, etc.

Throughout the week, political tensions continued to fuel negative sentiments, which made foreign investors uneasy. However, on the eve of the IMF board meeting, a strong rally pushed the benchmark index to its highest-ever closing at 82,242.92.

Arif Habib Ltd (AHL) said the market remained mixed throughout the week despite the KSE-100 index reaching an all-time high but failed to sustain and fell below 82,000 on profit-taking mainly by foreign investors in the last two sessions.

Repatriation of profits and dividends by multinational companies swelled more than five times in the first two months of the current fiscal year, $274.7 million during July-Aug FY25 against $49.2m in the corresponding period last year. The dollar outflow in August increased by 188pc year-on-year to $135.6m.

The State Bank of Pakistan reported a modest increase of $24 million to $9.5 billion in its reserves week-on-week, reaching the highest level since July 2022, without disclosing the source of this meagre inflow. The rupee appreciated against the dollar by 0.05pcat Rs277.7.

As a result, the benchmark index settled at 81,292 points after losing 782 points or 0.95pc week-on-week.

Sector-wise positive contributions came from fertiliser (440 points), commercial banks (212 points), automobile parts and accessories (28 points), leather and tanneries (27 points) and pharmaceuticals (20 points). Mean­while, the sectors that mainly contributed negatively were power generation and distribution (755 points), oil and gas exploration (348 points), technology and communication (111 points), oil and gas marketing companies (106 points) and textiles (54 points).

Scrip-wise positive contributors were Fauji Fertiliser (435 points), United Bank Ltd (179 points),

Bank Al-Habib Ltd (93 points), Oil and Gas Development Company (56 points), and Fauji Fertiliser

Bin Qasim Ltd 55 points). Meanwhile, scrip-wise negative contributions came from Hub Power (595 points), Mari Petroleum Ltd (331 points), Pakistan Petroleum Ltd (107 points), Engro Corporation (95 points), and Ban Al-Falah (71 points).

Foreign selling continued clocking in at $12.4m compared to a net sell of $23.2m last week. Major selling was witnessed in exploration and production ($6.2m), followed by fertiliser ($5.2m). On the local front, buying was reported by mutual funds ($16.2m), followed by companies ($8.9m).

The average trading volume dipped 16.7pc to 391m shares while the value traded fell 7.9pc to $61m week-on-week.

According to AHL, the market will likely resume upward momentum, bolstered by the arrival of the first IMF tranche and a further decline in inflation in September.

Published in Dawn, September 29th, 2024