The Pakistan Stock Exchange experienced volatility throughout the week ended on July 29, 2024, heavily influenced by political noise. The benchmark index lost 2,088 points 0r 2.61%WoW at close at 78,029 points.
With Pakistan's agenda yet to be included in the IMF board meeting, authorities are focusing on fulfilling other external financing requirements, with efforts including visit to China for possible debt rescheduling, especially of power producers.
The Finance Minister engaged with global rating agencies, Fitch and Moody's, aiming for a possible improvement in the country's credit rating to facilitate capital raising through external sources.
In the last T-Bills auction, yields dropped by 30-56 bps, indicating market expectations of a 50-100bps cut in the upcoming Monetary Policy Committee (MPC) meeting on Monday. However, experts anticipate the MPC to maintain the status quo due to the re-emergence of strong inflationary pressures from food supply disruptions and recently announced revenue measures in the FY25 budget.
The July 2024 inflation is expected to clock in at 10.96%YoY as compared to 12.57%YoY in the preceding month. On the external front, foreign exchange reserves held by the central bank declined by US$397 million to US$9.03 billion as at July 19, 2024.
With the said volatility in market, participation decreased by 27.3%WoW, with the average daily traded volume falling to 337 million shares, from 464 million shares a week ago.
On the currency front, PKR largely remained flat against the greenback throughout the week, closing the week at 278.3/US$.
Other major news flows during the week included:1) Forex reserves declined by US$369 millio, 2) Income estimates slashed to PKR9.1 trillion, 3) Auto financing registered downward trend for second straight year and 4) GoP announced to pull out of fuel pricing process, giving OMCs free hand.
Leasing, Vanaspati & allied industries and Textile spinning were amongst the top performers, while ETF’s, Inv. Banks/ cos., and Jute were amongst the worst performers.
Major net selling was recorded by mutual funds with a net sell of US$5.0 million. Foreigners and insurance co. absorbed most of the selling with a net buy of US$4.6 million and US$4.4 million, respectively.
Top performing scrips of the week were: PAKT, GADT, JVDC, FFBL and LCI, while laggards included: NCPL, NPL, KAPCO, INIL and FCEPL.
Going forward, market’s focus will primarily be on the MPC meeting scheduled for Monday, with any rate cut to boost investor’s confidence and draw increased attention to the cyclical sector.
Additionally, the anticipated approval from the IMF executive board next month is likely to support bullish momentum.
Sectors benefiting from monetary easing and structural reforms would remain in the limelight.
