Possible Exclusion of Pakistan From Grey List Turns PSX Bullish

By Irfan Ahmed

ISLAMABAD, June 22, (INP-WealthPK): After the bloodbath at Pakistan Stock Exchange last week, the market sentiment turned positive amid the expectations of exclusion of the country from the grey list of the Financial Action Task Force.

Trading during the past week kicked off on a negative note amid concerns over the dissatisfaction shown by the International Monetary Fund (IMF) about the measures taken by the government in the federal budget for the year 2022-23, whereby the market plunged by 1,135 points, on day-on-day basis.

However, the investors remained elated owing to the news flow regarding the consent of China to roll over loans worth $2.3 billion to Pakistan and extend further assistance by $2.5 billion to $ 2.8 billion.

Furthermore, the government increased the prices of motor spirit (MS) and high-speed diesel (HSD) by Rs24.03 per litre and Rs59.16 per litre, respectively, and completely eliminated the remaining subsidies to fulfil one of the major conditions of IMF for continuity of its programme.

However, the rupee continued to plunge throughout the week against the dollar, closing at 208, the lowest level ever. The reserves of the State Bank of Pakistan also dropped to a staggering $8.99 billion. The market closed at 42,141 points, up by 126 points (up by 0.3%), on week-on-week basis.

According to WealthPK analysis, the market ended the day with a gain of 126.03 points, closing at 42,140.76 points. The All-Share index was down by 75.05 points, the KSE-30 index was up 36.25 points, and the KMI-30 index increased by 990.13 points on a weekly basis.

Index Week Start Week End Change % Δ
KSE 100 Index 42,014.73 42,140.76 126.03 0.29996623
All Shares Index 28,842.17 28,767.12 -75.05 -0.26020927
KSE 30 Index 16,064.58 16,100.83 36.25 0.22565171
KMI 30 Index 68,850.09 69,840.22 990.13 1.43809543

Source: PSX/ WealthPK Research

Pakistan Stock Exchange witnessed a bloodbath on June 14 due to high inflation and post-budget concerns. The benchmark KSE-100 index plunged by 1,134.80 points and closed at 40,879.93 points. During the session, the index hit 42,069.65 points intra-day high and 40,833.50 points intra-day low level. The market fell to a 19-month low as investors lost over Rs178 billion in a single trading session.

The stock market took a bullish turnaround on June 14 with the start of FATF’s meeting as the investors were optimistic about the exclusion of Pakistan from the grey list. The KSE 100 index gained 174.75 points, a positive change of 0.43%, closing at 41,054.68 points against 40,879.93 points on the last working day.

Pakistan stocks witnessed a bullish trend gaining 384.11 points on June 15 owing to the expectations of coming out of the grey list of FATF. The benchmark KSE-100 index ended at 41,439.79 points from the previous day’s closing of 41,054.68 points, showing an increase of 384.11 points.

The PSX bullish trend continued on June 16 due to investors’ confidence as the government declared that fuel prices would be raised further to comply with the IMF programme. The benchmark KSE-100 index witnessed a bullish trend, gaining 291.37 points, a positive change of 0.70%, and closed at 41,730.16 points.

Bulls dominated the stock market on June 10. The benchmark KSE-100 index gained 410.60 points, a positive change of 0.98%, and closed at 42,140.76 points.

Source: PSX/ WealthPK Research

By selling its shares last week, the Foreign Investors Portfolio Investment (FIPI) made a profit of up to $1.91 million. Mutual funds made the most money this week, selling their shares for $2.94 million, followed by other organigations treading with $1.03 million and non-bank financial companies with $0.43 million. Companies purchased up to $10.54 million in shares, followed by individuals, who purchased $5.78 million in stock. Banks purchased up to $0.36 million worth of stock.

Mohammad Ahmed, a financial analyst with Arif Habib Limited, told WealthPk that Pakistan fulfilled all the requirements to ensure continuity of the IMF programme. “We expect the market to be positive in the coming week. However, continuous depreciation of the rupee against the greenback will cause inflation,” he added.

He said that the banking sector, petroleum, automobile and cement industry were among the most popular stocks for the coming week.