KARACHI: Stock trading in the outgoing week commenced on a negative note because of the uncertainty over the International Monetary Fund (IMF) loan programme.

However, market sentiments turned positive after a consortium of Chinese banks signed a $2.3 billion loan facility agreement while the Economic Coordination Committee (ECC) of the cabinet approved the second installment of Rs96bn to settle the outstanding dues of Independent Power Producers (IPPs), according to Arif Habib Ltd.

Mid-week, the finance minister announced that an IMF deal was imminent, which helped boost investors’ sentiments. But the government announced a 10 per cent super tax on 13 major sectors as well as a 4pc additional levy on banks during the last trading session. The sudden announcement caused the stock market to go down in a spiral and hit an intraday low of 40,555 points.

The benchmark index closed at 41,052 points, down 1,089 points or 2.58pc from a week ago.

In other market-moving news, foreign exchange reserves of the State Bank of Pakistan decreased $748m to $8.24bn. It put further pressure on the rupee, which dipped to an all-time low of 211.93. However, a later statement about the China deal helped the local currency recover some lost ground against the dollar and closed at 207.48 for the week.

Sector-wise negative contributions came from banks (296 points), energy exploration and production (194 points), cement (194 points), fertiliser (120 points) and textile composite (61 points).

Sectors that contributed positively were tobacco (12 points), insurance (12 points) and paper and board (eight points).

Scrip-wise, negative contributors were United Bank Ltd (97 points), Pakistan Oilfields Ltd (88 points), Engro Corporation Ltd (83 points), Lucky Cement Ltd (79 points) and the Hub Power Company Ltd (75 points). Meanwhile, scrip-wise positive contribution came from EFU General Insurance Company Ltd (20 points), K-Electric Ltd (18 points), Kot Addu Power Company Ltd (13 points), Pakistan Tobacco Company Ltd (12 points) and Packages Ltd (eight points). Foreign selling clocked up at $2.39m versus a net sale of $1.91m in the preceding week. On the local front, buying was reported by individuals ($7m) and “other organisations” ($3.4m).

“We believe clarity should emerge next week on certain economic policies, which should aid sentiments on the bourse. It seems Pakistan has met all requirements to enter into the IMF programme to receive the $1bn tranche. Once the package comes through, other sources of foreign exchange should also open up, which should reduce some pressure from our dwindling reserves,” said the brokerage.

Published in Dawn, June 26th, 2022