KARACHI: The stock market commenced on a positive note in the outgoing week as the country received a $2.3 billion loan from China, taking the central bank’s foreign exchange reserves to $10bn, said Arif Habib Ltd.

This led to the rupee gaining strength against the greenback with the local currency settling at 204.85 on June 30, the last working day of 2021-22.

Pakistan also received the Memorandum of Economic and Financial Policies from the International Monetary Fund (IMF), which signalled that the government is inching closer to an agreement with the lender of last resort.

In addition, the National Assembly approved the amendments to the Finance Bill, which brought clarity to the stock market, especially with regard to the tax burden on the banking sector.

Furthermore, independent power producers of the 2002 policy received the second instalment of Rs96bn as part of the renegotiated agreements over the settlement of dues.

However, the positive sentiment was adversely affected by the fiscal measures — such as a hike in the prices of petrol and diesel by Rs14.85 and Rs13.23 per litre, respectively — that the government took to ensure the approval of the seventh and eighth loan programme reviews by the IMF.

Another factor affecting the stock market sentiments was inflation, which clocked in at 21.32 per cent for June, while the current account deficit widened to $1.4bn in May.

As a result, the stock market closed at 41,630 points, gaining 579 points or 1.41pc week-on-week.

Sector-wise, positive contributions came from cement (92 points), power (74 points), exploration and production (69 points), fertiliser (68 points) and banking (55 points).

Sectors that contributed negatively were refinery (six points) and cable and electrical goods (four points).

Scrip-wise, positive contributors were the Hub Power Company Ltd (83 points), Pakistan Oilfields Ltd (64 points), Lucky Cement Ltd (47 points), Engro Fertilisers Ltd (39 points) and Mari Petroleum Company Ltd (36 points).

Meanwhile, negative contributors were Habib Bank Ltd (32 points), Engro Polymer and Chemicals Ltd (22 points), Oil and Gas Development Company Ltd (22 points), Kot Addu Power Company Ltd (13 points) and Dawood Hercules Corporation Ltd (11 points).

Foreign selling of $1.52m was witnessed in the outgoing week versus a net sale of $2.39m in the preceding week.

Major selling was witnessed in fertiliser ($0.3m). On the local front, buying was reported by banks ($6.8m) followed by individuals ($4.1m). The average daily volume clocked in at 199m shares, down 34pc week-on-week. The average daily value settled at $30m, down 31pc from a week ago.

According to AKD Securities, the stock market’s volatility will remain high with the near-term economic outlook staying hazy amid the pending revival of the IMF programme. “We expect the State Bank of Pakistan to raise the interest rates by another 150 basis points in the upcoming monetary policy announcement, it said, asking investors to use bull runs as good exit points.

Published in Dawn, July 3rd, 2022