KARACHI: The stock market commenced on a negative note in the outgoing week as inflation for July clocked in at 24.9 per cent.

Arif Habib Ltd said in a research note the investors’ sentiment turned positive after the International Monetary Fund (IMF) announced that Pakistan had fulfilled the last remaining prerequisite for the resumption of the loan programme i.e. incremental hike in the petroleum development levy on petrol and diesel.

The rupee strengthened against the greenback and gained Rs15.33 or 6pc week-on-week to close at 224.04. Furthermore, the trade deficit declined 47pc in July on a month-on-month basis. Moreover, a reduction in international oil prices post-Opec+ meeting further cemented the ground for a bull run on the equities. Oil index WTI traded below $88 per barrel versus $98.62 per unit a week ago.

As a result, the national equity benchmark closed at 42,096 points after gaining 1,946 points or 4.9pc on a week-on-week basis.

Sector-wise, positive contributions to the index came from banking (427 points), cement (421 points), fertiliser (112 points), chemical (111 points) and oil marketing (106 points).

Sectors that contributed negatively to the index were close-end mutual fund (three points) and real estate investment trust (one point).

Scrip-wise, positive contributors were Lucky Cement Ltd (155 points), United Bank Ltd (124 points), MCB Bank Ltd (87 points), Pakistan State Oil Company Ltd (78 points) and Colgate-Palmolive Pakistan Ltd (73 points).

Negative contributors stock-wise were Faysal Bank Ltd (10 points), Mari Petroleum Company Ltd (six points), Interloop Ltd (four points) and Adamjee Insurance Company Ltd (three points).

Foreign selling was witnessed this week as it clocked in at $0.69 million versus a net purchase of $0.57m in the preceding week. Major selling was witnessed in banking ($0.9m) and fertiliser ($0.6m) firms.

On the local front, buying was reported by brokers ($2.2m) and mutual funds ($1.6m).

The average daily volume clocked in at 263m shares, up 75pc week-on-week. The average value traded settled at $34m, up 56pc from a week ago.

According to AKD Securities Ltd, the market momentum will likely be positive next week as the country moves closer to the IMF’s disbursement of the $1.2bn loan tranche.

“The currency market will also remain buoyant and the rupee may gain further ground against the greenback as the threat of immediate default has subsided to a great extent after friendly countries came forward to bail Pakistan out,” it added.

The brokerage noted that import-oriented sectors will remain in the limelight and may end up outperforming the overall stock market. “We highlight autos, engineering and refineries may outperform in the short run,” it added.

Published in Dawn, August 7th, 2022