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Bullish sentiments push KSE-100 index up 2pc wow
Summary

The IMF news during the week dominated the impact on Pakistan Stock Exchange (PSX). Increasing COVID cases forced the authorities to curb activities, reduce business timings, close down the schools, contemplate further lock downs and as Prime Minister says it’s time for ‘new IMF package’. On the political front opposition did not trigger any problem but one has to watch the Daska election on April 10, which will be a test for the government.

The KSE-100 Index gained 885.53 or up 2 percent to close at 45,186.48. Daily trading volume on ready counter increased to average 410 million shares an increase of 8.5 percent compared to previous week. The market capitalization increased by Rs.92 billion to Rs.7.926 trillion. Out of the 394 active scrips, 210 closed in positive, 167 in negative and 11 stocks remained unchanged.

On Monday, the market remained under selling pressure. The increasing COVID cases had forced the authorities to curb activities. The Index dropped 762.74 points to close at 43,548.21. The average volume was 303 million shares. The foreigners remained net buyers of shares of $0.63m.

On Tuesday, the investors’ confidence increased after the government commitment to curtail inflation as Hammad Azhar, new Finance Minister ordered steps aimed at arresting surge in prices and possibility of Pakistan receiving further debt relief from G20 countries. The KSE-100 Index gained 856.49 points to close at 44,404.70.

The stocks falter again on Wednesday due to massive foreign selling of $10.82m. The Index closed at 43,953.59.

There was a rally of 787.78 on Thursday due to some positive news after the government’s effort to curtail the spread of COVID-19 and the ongoing vaccination. The division in the opposition and the extension in debt servicing by G20 had a positive effect on the sentiments and the slight decline in cut-off yields in T-bills auction. The Index closed at 44,741.36.

On Friday, KSE-100 Index closed with a gain of 445.12 crossing 45,000 level to 45,186.48. The volume touched the highest of the week 688 million shares.

Participants/Activity

Foreigners were net seller $9.51m during the week; companies were buyer by $2.49m, Banks were buyer $3.14m; Mutual fund net seller $2.40m individuals net seller $0.29m and Insurance were buyer $0.87m.

Volume leaders during the were: World Call Tele 124m; TRG Pak 113m; Byco Pet. 110m; Telecard 75m; Pak Ref 67m; Dost Steel Mills 54m; Unity Foods 53m; Ghani G10 Hol 52m; Azgard Nine 39m; Lotte Chemical 22m; Silk Bank 20m; and Net Sol Tech 19m.

Triggers

– The IMF has projected Pakistan’s GDP growth rate at 1.5 percent for 2021 against negative 0.4 percent in 2020. It also project rise in unemployment from 4.5 percent to 5 percent in 2021.

– The IMF has projected Pakistan’s export will touch $23.635 billion during the fiscal year 2020-21 where as imports are expected to reach $46.168 billion on FoB basis.

– The SBP has confirmed received inflows amounting to $2.5 billion of recently – launched Eurobonds. The country’s total liquid foreign exchange reserves were $20.679 billion as on April 2, 2021 and with the proceeds Eurobond, the country’s foreign exchange reserves are likely to cross the $23 billion mark, the highest level since July 2017.

– The IMF on Wednesday projected Pakistan fiscal position to remain under pressure during the current fiscal year with budget and primary deficit at 7.1 percent and 1 of GDP respectively and debt levels staying elevated at 87.7 percent.

– Government raised Rs.869bn through T-bill auction on Wednesday.

Conclusion

The jittery movement of stock exchange shows the uncertainties of political economy. The sudden removal of Dr. Abdul Hafeez Shaikh with young but inexperienced Hammad Azhar and then including Shaukat Tarin among members of reconstitution of Economic Advisory Council by Prime Minister is quite puzzling for the investors. Mr. Tarin is critical of the policies pursued under Dr. Abdul Hafeez Shaikh and SBP Governor Dr. Reza Baqir and unreasonable agreement of IMF. It is interesting to watch the development in coming days.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi
Dated: April 9, 2021

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