KARACHI: The Pakistan stock exchange closed almost flat for the week ended March 22, 2019 as investor climate in the outgoing week regained some confidence while volumes continued to remain dull.
“Improvement on the external front (CAD portrayed a significant decline of 72% YoY/59% MoM during February 2019, while contracting 23% YoY during 8MFY19), visit of Malaysian PM Mahatir Mohamad and improving ties with the US all contributed towards stimulating positivity in the investors’ sentiments,” a report issued by Arif Habib Limited said.
After six consecutive weeks in the red, the benchmark KSE-100 finally gained 225 points (0.6%) to close the week at 38,532 points. This turn of events came as average daily traded value increased by 7% to $28 million while average daily traded volume dipped a further 10% to 84 million shares.
Foreign buying witnessed in the week settled at USD 3.1mn compared to a net sell of USD 15.6mn last week. Buying was witnessed in Commercial Banks (USD 2.9mn) and Exploration & Production (USD 1.7mn). On the domestic front, major selling was reported by Insurance Companies (USD 4.8mn) and Other Organizations (USD 2.7mn). Average volumes during the week settled at 84mn shares (down by 10% WoW) whereas average value traded arrived at USD 28mn (up by 6.6% WoW).
“The bourse witnessed net foreign buying of $3.1 million in Commercial Banks ($2.9mn), Oil & Gas Exploration Companies ($1.7mn) and Power Generation and Distribution ($1.3mn),” a report issued by JS Global Capital said.
During the week, Economic Coordination Committee (ECC) allowed Pakistan International Airline (PIA) to temporarily hold up around Rs96 billion in payments the airline owes to the Civil Aviation Authority (CAA). The committee also approved a proposal of ministry of industries and production to allocate 66mmcfd additional Mari deep gas to Power Infrastructure Board (PPIB) for power generation purposes.
Additionally, amid an overbilling inquiry, the government shuffled Sui Northern Gas Pipelines (SNGPL)’s top management. Furthermore, the government is planning to increase electricity rates by Rs3.26/unit in coming months in order to meet revenue requirements of power distribution companies (DISCOS).
On the macro front, foreign exchange reserves held by State Bank of Pakistan (SBP) increased by $733 million to $8.8 billion due to inflows from UAE.
Additionally, the country is expected to receive $2.1 billion loan from China within the next week. Pakistan has also requested the Asian Development Bank to approve $500 million in budgetary support before June this year, as it faces difficulties in retaining foreign exchange reserves because of mounting external financing needs.
“We can expect the market to display a mixed trend next week showing a range-bound behavior. Concerns of an expected hike in the upcoming monetary policy statement may keep investors on the back seat. However, valuations across the index have opened up to an enticing level which can provide numerous entry options,” an analyst at Arif Habib Limited said.