The Pakistan Stock Exchange witnessed another volatile week as jittery investors tried to find major positive cues amid continuously deteriorating economic as well as political situation in the country.

However, they finally got some respite later in the outgoing week mainly owing to the decision of Pakistan Tehreek-e-Insaf’s (PTI) chief Imran Khan to postpone the sit-in in the capital, thus easing political tensions to some extent.

Moreover, the government’s decision to increase petroleum prices to pave the way for the resumption of International Monetary Fund’s (IMF) loan programme also supported the interest of market players.

Consequently, the benchmark KSE-100 index closed the week with a loss of 239 points, or 0.56 percent, at 42,861.

“Concerns over the IMF loan programme amid declining foreign exchange reserves and increasing political noise weighed on investors’ sentiment,” a report of Topline Securities stated.

“However, some recovery was observed in the last few trading sessions as the PTI chief decided to postpone the sit-in and the government increased prices of petroleum products, thus paving the way for the IMF programme,” the report added.

The week commenced on a negative note as the benchmark KSE-100 index plunged by around 1,150 points during the first two trading days, as the State Bank of Pakistan (SBP) hiked the key policy rate by 150 basis points to an 11-year high at 13.75 percent.

In addition, the heated political environment besides the persistently deteriorating macroeconomic outlook also kept the investors’ interest in check.

The falling Pakistani rupee against the US dollar amid fast depleting foreign exchange reserves continued to haunt the trading atmosphere at the bourse, thus keeping the bulls at bay.

All in all, investors were observed trying to find positive cues in the overall gloomy situation.

However, the index posted a U-shaped recovery in the final days of the week, adding around 911 points collectively, as jittery investors finally managed to find some positivity.

Investors began to see some light at the end of the tunnel as the government decided to withdraw subsidies on petroleum products in line with the IMF’s condition for resuming the much-needed loan programme.

Moreover, relaxation on the political front with the postponement of PTI’s protest in the capital instilled some optimism among the market participants, which aided the recovery at the bourse.

“In the upcoming week, the market may remain jittery due to the political strain, as the PTI has given six days to the government to announce elections,” stated a report of Arif Habib Limited.

“However, it appears that the government’s removal of subsidy on fuel and electricity will win IMF’s approval,” the report said, adding “once the package comes through, other sources of foreign exchange should also open up, which will be a positive sign for the market.”

During the week under review, average daily traded volume increased 27% week-on-week to 281 million shares, while average daily traded value inclined 26% week-on-week to $39 million.

In terms of sectors, positive contribution came from technology and communication (66 points), refinery (40 points), automobile assemblers (32 points), oil and gas marketing companies (15 points) and food and personal care products (14 points).

On the flip side, sectors which contributed negatively included fertiliser (132 points), commercial banks (76 points), cement (56 points), oil and gas exploration companies (41 points) and power generation and distribution (29 points).

Meanwhile, stock-wise positive contributors were TRG Pakistan (64 points), Millat Tractors (34 points), Habib Bank Limited (30 points), Avanceon Limited (23 points) and Cnergyico PK (19 points).

However, negative contribution came from Fauji Fertiliser Company (63 points), Engro Fertilisers (57 points), Lucky Cement (48 points), Hub Power Company (39 points) and Oil and Gas Development Company (30 points).

Foreign selling was witnessed during the week, which came in at $1.5 million as compared to net selling of $6.1 million in the previous week. Major selling was witnessed in cement firms ($1.8 million) and banks ($1.4 million).

On the domestic front, buying was reported by individuals ($11 million), followed by proprietary trading brokers ($2.9 million).

Among major news of the week, the trade deficit touched $39.3 billion, the State Bank increased Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) rates by 2%, and raised the key policy rate by 150 basis points to 13.75%, minister for commerce expressed interest in enhancing trade ties with the European Union and finance ministry stopped public sector enterprises from depositing funds in private banks.

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