Inflation, Political Woes Bring Stocks Down For Second Week

(CTN News) – Investor sentiment was weighed down by political uncertainty and high inflation for a second consecutive week. Traders expect the market to remain stable in the coming week following the establishment of the caretaker cabinet.

“We expect a forthcoming week of market stability following the establishment of a caretaker cabinet and the clarity of the interim governance arrangement,” said brokerage Arif Habib Ltd. Some sectors and stocks are likely to attract attention, driven by the expectation of robust financial performance. This anticipation could potentially stimulate positive market momentum.”

As a result of a variety of political and economic Inflation developments in the past week, the market remained range-bound. An interim caretaker setup took over governance, resulting in a transition in governance.

Petrol and diesel prices increased significantly by PKR 17.5 and 20.0, respectively, negatively affecting the market.

A fiscal deficit of Rs6,521 billion (7.7% of GDP) was recorded for the fiscal year. As of June 2023, the central government’s debt was Rs60.8 trillion (+3.3 percent MoM). Last week, the SBP’s reserves increased by $12 million to $8.1 billion.

During the week, the rupee fell against Inflation the US dollar,

Closing at Rs295.78, down Rs7.29 (-2.46 percent).

Over the week, the KSE100 index closed at 48,218 points, down 206 points (-0.4 percent). A total of 232 million shares were traded (down 32.6% week-over-week), averaging $32 million in value (down 36 percent).

Last week’s net foreign purchase was $2.92 million, compared to $2.38 million this week. A total of $1.45 million was spent on technology and $0.72 million was spent on exploration and production (E&P). Banks ($3.9 million) and funds ($1.62 million) reported local selling.

A negative contribution was made by commercial banks (159 points), fertilizer (122 points), cement (63 points), chemicals (38 points), and oil & gas (37 points). ENGRO, OGDC, MCB, MEBL, and HBL contributed negative points by scrip.

While technology (194 points) and Inflation textile composite (20 points) contributed most positively, NESTLE (28 points), THALL (17 points), and ILP (17 points) contributed positively too.

Muhammad Waqas Ghani, an analyst at JS Research, said the week started out positively, but volatility remained. Anwaar Kakar, the Caretaker Prime Minister, has taken oath, putting an end to all rumors and speculation.

On Thursday, the incoming PM’s cabinet took oaths. A possible extended caretaker setup was discussed this week.

Due to volatile economic and political conditions, LSM output declined 10.3 percent YoY in FY23.

According to Topline Securities’ Nabeel Haroon, investor participation declined during the week as investors preferred to monitor the transition to the interim government before making further investments.

It is estimated that Pakistan has circular debt of Rs1.6 trillion in the Inflation gas sector, which it shared with the International Monetary Fund (IMF).

According to official figures, the fiscal deficit for FY23 was Rs6.5 trillion (7.7 percent of GDP). Compared to the initial budget, the deficit was 71 percent higher and revenue was 10 percent higher.

Furthermore, Pakistan’s current account deficit (CAD) reached $809 million in July after four Inflation consecutive surpluses.

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