Stocks soar on Saudi aid in nervous week

KARACHI: The Pakistan Stock Exchange (PSX) benchmark index gained 641 points last week and closed at 46,219 points, up 1.41 percent on a weekly basis.

According to AKD Securities, the stock market remained jittery in the first two sessions, as it lost 351 points amid uncertainty over the pending review of the International Monetary Fund (IMF).

In the third session, however, the stock market recovered strongly, adding 564 points to the news of an expected $3 billion inflow from Saudi Arabia. It instilled confidence in investors as they turned bullish. One consequence of that news was the appreciation of the local currency against the dollar. The rupee gained 1.4 pc. versus the greenback during the intraday session, closing at 172.6 rubles.

In addition, the IMF allowed Pakistan to use $2.78 billion to meet the budgetary requirements the fund had provided to Pakistan to fight Covid-19. This further fueled the positive momentum in the stock market.

However, average weekly volume remained at 305.96 million shares, down 10.5 percent from 341.8 million shares a week ago. The brokerage said the volume drop was due to the inefficiencies in the newly implemented trading system at the PSX.

Other key events that took place this week included Pakistan and Japan agreeing to defer $200 million in debt payments, urea declines jumped 24 percent year-on-year in September, Qatar decided to invest in Pakistan’s upcoming LNG terminal, the Power Division is seeking a Rs 134.8 billion technical supplementary grant to purge independent power generators’ dues and reduce the budget deficit for July-August at 0.9 pc of GDP.

The best performers during the outbound week were Packages Ltd, which rose week-on-week with 14.6 pc. rose, followed by Shifa International Hospitals Ltd (12.5 pc), Pioneer Cement Ltd (10.8 pc), International Steels Ltd (10.6 pc) and International Industries Ltd (10.4 pc).

In terms of flow, “other organizations” remained key buyers as they posted a net purchase of $1.7 million. They were followed by insurance companies with a net purchase of $1.32 million. Foreigners were on the other side with net sales of $2.68 million, followed by individuals selling shares worth $1.05 million.

According to Arif Habib Ltd, the stock market is likely to show positivity in the coming week, thanks to the conclusion of talks with the IMF for the sixth tranche. In addition, Saudi Arabia’s support for safe deposits and the forthcoming sukuk issuance in addition to the debt service suspension will ease pressure on the country’s foreign exchange reserves.

“However, current macroeconomic concerns, such as rising imports and higher inflation, may limit market reach,” it added.

Published in Dawn, October 31, 2021