The Pakistan Stock Exchange (PSX) continued to be in the doldrums for another week as concerns over disappointing economic indicators mounted further.

During the week, issues relating to the massive losses incurred due to catastrophic floods and macroeconomic uncertainty persisted, which pushed the benchmark KSE-100 index down, which closed at 41,948 points, falling 0.9% or 361 points.

Starting on a negative note, the market failed to attract investors as they preferred to remain on the sidelines due to a lack of clarity on the economic strategy of the policymakers.

The bears kickstarted the week by pulling the stocks below the 42,000-point mark on account of concerns about inflation and gross domestic product growth post the flood crisis in the country since the government estimates losses to be around $15-20 billion.

Despite the disbursement of the International Monetary Fund (IMF) loan of $1.17 billion last week (taking the reserves held by the State Bank to $8.8 billion), the rupee continued to weaken against the greenback to settle at Rs228.18 (down by Rs9.2, or 4%, week-on-week).

Moreover, the cement sector dispatches in August 2022 witnessed a decline of 24% year-on-year which further dampened the investor sentiment.

Furthermore, urea and DAP sales witnessed a massive fall of 16% and 87% year-on-year, respectively due to floods. Hence the market remained lacklustre.

Other major developments during the week were: exports jumped by 11.6% in August, PIA decided to induct five more aircraft in its fleet, Pakistan petroleum sales slumped by 24% in 2MFY23, IMF projected external debt to reach $140.9 billion, and ECC allowed Trading Corporation of Pakistan (TCP) to import 0.3 million tons of urea on a government-to-government basis.

Meanwhile, foreign selling continued this week, clocking in at $2.82 million against a net sell of $0.74 million recorded last week. Selling was witnessed in technology ($1.4 million), and cement ($0.6 million).

On the domestic front, major buying was reported by companies ($3.2 million), followed by banks, and development finance institutions ($2.6 million).

During the week under review, average volumes clocked in at 139 million shares (down by 35% week-on-week), while the average value traded settled at $21 million (down by 34% week-on-week).

MAJOR GAINERS, LOSERS: Sector-wise negative contributions came from fertiliser (-78 points), commercial banks (-77 points), power generation and distribution (-54 points), food and personal (-45 points), and oil and gas exploration companies (-40 points).

On the flip side, positive contributions came from technology and communication (+14 points), and oil and gas marketing companies (+11 points).

Scrip-wise major losers were Engro Corporation (-57 points), Hubco (-51 points), HBL (-44 points), Engro Fertiliser (-40 points), and Systems Limited (-30 points).

Meanwhile, major gainers were TRG Pakistan (+47 points), Cherat Cement Company (+24 points), Pakistan Oilfields (+19 points), Dawood Hercules (+15 points), and Lotte Chemical (+12 points).

OUTLOOK FOR NEXT WEEK: A report from Arif Habib Limited stated that the market is expected to remain range-bound in the upcoming week amid concerns over rupee depreciation and inflation.

“Valuations across the board particularly in blue-chips have reached attractive levels.,” it said, advising investors to invest in blue chip scrips.

“The KSE-100 is currently trading at a PER of 4.1x (2023) compared to the Asia-Pacific regional average of 12.5x while offering a dividend yield of 9.6% versus 2.7% offered by the region,” the brokerage house stated.

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