KARACHI: Trading on the Pakistan Stock Exchange (PSX) in the outgoing week began on a negative note. Investors reacted poorly to the uncertainty over the outcome of Pakistan’s talks with the International Monetary Fund (IMF).

According to Arif Habib Ltd, a major hike in petroleum prices also raised concerns about growing inflation. However, the mood of investors changed as soon as the premier’s adviser on finance told the press that the talks with the IMF were headed in the right direction and that a staff-level agreement was expected soon.

In other news, the central bank reported that the current account deficit for September narrowed 24.5 per cent on a month-on-month basis to $1.1 billion, which fuelled the positive momentum. Besides, a continuous drop in the rupee-dollar parity to Rs174 along with an 8pc reduction in the central bank’s reserves on a weekly basis to $17.5bn kept the index in check.

As a result, the benchmark of the PSX closed at 45,578 points, registering a gain of 757 points or 1.7pc from a week ago.

According to AKD Securities, commercial banks remained one of the best performers in the week. Increasing inflation and a depreciating exchange rate infused expectations among investors of an interest rate hike. Yields of the three-month treasury bills also increased 40 basis points in the latest auction, which also signified that the market was anticipating an increase in the benchmark interest rate.

Increasing oil prices on the back of a global energy crunch instilled fuel into the oil and gas exploration sector, with its constituents posting an average increase of 2.1pc during the week.

One of the major beneficiaries of a depreciating exchange rate was the textile sector. It posted a return of 2.7pc on a week-on-week basis.

Foreigners remained on the selling side during the week, posting a net sale of $12.8 million. A major part of this selling was absorbed by the insurance sector, which made a net purchase of $6.49m.

The average daily traded volume during the outgoing week decreased 10.5pc on a week-on-week basis to 306m shares.

Stock-wise gainers were Adamjee Insurance Company Ltd, which went up 13.6pc during the week, followed by United Bank Ltd (9.8ps), Kohat Cement Company Ltd (9.8pc), Engro Polymer and Chemicals Ltd (9pc) and Habib Bank Ltd (9pc).

Laggards were Millat Tractors Ltd, which went down 18.8pc during the outgoing week, followed by JDW Sugar Mills (9.2pc), Ghani Glass Ltd (8.1pc), Honda Atlas Cars Company Ltd (7.8pc) and Kot Addu Power Company Ltd (7.7pc).

Arif Habib Ltd said it expects the stock market to remain positive in the coming week. “With the IMF and Pakistan expected to reach an agreement soon, the investor sentiment is anticipated to remain buoyant,” it added.

Published in Dawn, October 24th, 2021