KARACHI: Trading activity at the Pakistan stock market remained jittery, amid macroeconomic concerns, while the analysts expect the market to remain positive in the upcoming week attributable to talks with the International Monetary Fund (IMF) for the sixth tranche to start at the end of the current month.
“On the other hand, decline in infection ratio of the novel coronavirus in Pakistan and slowdown in [the] global oil prices would relieve pressure off the external account,” an analyst at Arif Habib Limited said.
“However, the current macroeconomic concerns such as rising imports, higher inflation due to increasing petroleum prices and pressure on currency could deteriorate investors’ sentiment.”
The Pakistan Stock Exchange KSE-100 shares index shed 1.19 per cent, or 562.21 points, to close the week ended September 17, 2021 at 46,636.08 points. The KSE-30 shares index shed 1.61 per cent, or 304.29 points, to close at 18,480.32 points.
Average volumes declined 7 per cent to clock-in at 400 million shares/day, while the average value of traded securities surged 3 per cent to settle at $90 million.
Foreigners offloaded stocks worth $10.9 million during the outgoing week, compared with the net selling of $18.6 million last week.
An analyst at BMA Capital said the local bourse witnessed range-bound behaviour and concluded the week down 1.2 per cent. “The depreciating local currency and increasing current account deficit kept the investors concerned. Moreover, higher coal prices placed selling pressure on cement, while higher oil prices raised concern over the future import bill.”
Similarly, concerns related to ballooning trade deficit and higher commodity prices continued to weigh on investors’ sentiments. However, the equities staged a comeback, as the rupee took a breather and clawed back some losses against the greenback later in the week.
All eyes are now set on the monetary policy meeting scheduled next week, as a sizeable minority of the market participants are expecting a minimal hike in the policy rate, despite broader market consensus of interest rates remaining unchanged.
The analysts believe the market is likely to remain sluggish in the short-term, mainly due to the concerns over the higher current account deficit and depreciating rupee.
“We expect the policy rate to remain unchanged; however, the upcoming monetary policy statement may induce activity in the market if a hike is proposed. We recommend investors to accumulate positions in the fertilisers, banks, autos, and cement sectors, as these are likely to perform, as market activity improves,” the BMA Capital analyst concluded.
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