KARACHI: Security concerns and delays in the IMF executive board’s approval for the first tranche of the $7 billion Extended Fund Facility contributed to a bearish sentiment in the market, leading the KSE 100 index to close the week lower.
Despite these challenges, the market saw some relief from a Moody’s credit rating upgrade and a projection by the Ministry of Finance that Consumer Price Index-based inflation might fall to between 9.5% and 10.5% in August. This raised expectations for a potential third consecutive cut in the State Bank of Pakistan’s policy rate at the upcoming September 12 monetary policy committee meeting.
Arif Habib Ltd (AHL) noted that the market was subdued throughout the week due to concerns about Pakistan’s exclusion from the IMF’s upcoming executive board meeting agenda. However, Moody’s upgraded Pakistan’s credit rating from Caa3 to Caa2 on Wednesday.
Other positive developments included a significant rise in foreign investors’ repatriation of profits and dividends, which increased 64 times to $139.13 million in July. Additionally, Saudi Arabia’s offer to buy a 15% stake in the Reko Diq mining project and an increase in SBP reserves to around $9.4 billion helped improve sentiment. The rupee also appreciated slightly against the dollar, reaching Rs278.5.
As a result, the KSE 100 index fell by 313 points, or 0.39%, to close at 78,488.21 points. Negative sector contributions were noted in commercial banks, cement, pharmaceuticals, technology and communication, and leather and tanneries, while positive contributions came from power generation, fertilizer, and chemicals. Notable positive scrips included Hub Power Company and National Bank of Pakistan, whereas Habib Bank Ltd and Meezan Bank Ltd were among the top negative contributors.
Foreign buying increased to $3.7 million compared to a net sell of $0.6 million the previous week. The average trade volume rose by 4.5% to 604 million shares, and the average value surged 20.5% to $67 million week-on-week.
AHL predicts that the market will likely remain positive in the coming week, driven by ongoing results season and potential updates related to the IMF.
