After closing the fourth consecutive week on a positive note, return of foreign buying and the government’s steps to pave way for revival of the International Monetary Fund’s extended fund facility may keep the Pakistan Stock Exchange (PSX) in green in the coming days.
The PSX also managed to close the year in green by gaining 813.69 points (+1.86 percent) on a year-on-year basis surging from 43,755.38 points (December 31, 2020) to 44596.07 points (December 31, 2021). The PSX gained around 180 points (+1.08 percent) on a week-on-week basis.
AKD Securities expects that the market will re-rate its valuations once the International Monetary Fund (IMF) programme begins. It expects the index will touch 61,000 points by the end of 2022. “We also expect the commodities to take a breather in 2022, helping our external account stabilise… we expect the current account deficit in 2022 to hover at $15 billion,” it said.
The brokerage said monetary tightening will be over by the end of June 2022 with a cumulative hike of 125 basis points in a phased manner. “With this, the market may replicate the move of 2005-08 where it gained over 112 percent,” it noted. Topline Securities, in its report on the performance of the equity market, said that 2021 remained a tough year for Pakistan’s benchmark KSE-100 index as the index underperformed regional market and other asset classes.
Arif Habib Limited, in its research note on the performance of the market, stated that given the volatile conditions, activity gained traction with record high average volumes witnessed in CY21 at 474 million shares against 330 million last year alongside highest ever average value traded at Rs16.9 billion, compared to Rs12.3 billion in CY20. With impressive growth in volumes at the bourse, capital raising this year arrived at a record high of Rs19.92 billion in CY21. Total transactions include 6 new listings as well as two new Gem board items.
During the last week, trading began on a bearish note and the bourse shed 204.95 points on Monday in a low-volume session, amid a lack of clarity on the implications of the supplementary finance bill as well as the rising concerns about the spread of the new variant of Covid-19 across Pakistan.
However, the next four sessions remained positive after uncertainties related to the supplementary finance bill began to subside. The PSX gained 130.30 points on Tuesday, 216.37 points on Wednesday, 156.09 points on Thursday, and 179.87 points on Friday, to close the week at 44,596.07 points. The investors’ sentiments strengthened after the mini-budget received the cabinet’s approval. It has now paved the way for the disbursement of a $1 billion tranche from the International Monetary Fund (IMF). Furthermore, the rupee-dollar parity also strengthened in the outgoing week to Rs176.51 — a four-week high.
However, the activity in the outgoing week remained subdued with the average volume of 218 million shares, up 1.2 percent from a week ago. The sectors taking the index towards north were cement (112 points), fertilizer (75 points), commercial banks (72 points), tobacco (32 points) and oil and gas marketing (32 points). The sectors taking the index towards south were power generation (18 points) and investment banks/ investment companies/ securities companies (7 points).
Foreign buying remained $8.1 million against a net sell of $3.7 million last week. Major buying was witnessed in the technology sector ($4.8 million). On the local front, selling was reported by banks ($2.5 million) and individuals ($2 million). The average value traded settled at $84 million, showing a 13 percent growth on a week-on-week basis.
