KARACHI: The stock market opened on a positive note in the outgoing week as the Saudi deposits of $3 billion were rolled over for a year while the International Monetary Fund (IMF) promised to extend support for flood relief and reconstruction.

Arif Habib Ltd said the momentum could not be sustained owing to the continuous decline in the State Bank of Pakistan (SBP) foreign exchange reserves, which dropped $278 million on a weekly basis. As a result, the rupee further depreciated against the greenback and closed at 239.65 towards the end of week.

In addition, foreign direct investment in the first two months of 2022-23 plummeted 26 per cent on a year-on-year basis.

The output of large-scale manufacturing reported a 1.4pc annual and 16.5pc monthly fall in July.

Stock investors opted for value buying amid the expectations that the country might receive $1.5bn, $0.5bn and $0.2bn from Asian Development Bank, Asian Infrastructure Investment Bank and the Japanese government, respectively.

Moreover, investors also expected the World Bank to give flood-related support of $1.7bn.

In other market-moving news, the current account deficit reduced 54pc year-on-year in August, which further cushioned the overall decline in the index during the week.

As a result, the stock market closed at 40,620 points after shedding 1,059 points or 2.5pc from a week ago.

Sector-wise, negative contributions came from exploration and production (251 points), banking (246 points), cement (123 points), power (74 points) and oil marketing companies (73 points).

Sectors that contributed positively were tobacco (15 points) and automobile parts (two points).

Scrip-wise, negative contributors were Pakistan Petroleum Company Ltd (117 points), Oil and Gas Development Company Ltd (84 points), Lucky Cement (83 points), Meezan Bank Ltd (66 points) and Habib Metro Bank Ltd (51 points).

Positive contributions came from TRG Pakistan Ltd (21 points), Pakistan Tobacco Ltd (15 points), Unity Foods Ltd (eight points), Fauji Fertiliser Company Ltd (six points) and Ibrahim Fibres Ltd (four points).

Foreign buying continued in the outgoing week and clocked in at $5.09m versus a net purchase of $13.8m a week ago. Major buying was witnessed in technology ($6.6m), exploration and production ($0.5m), cement ($0.5m) and oil and gas marketing ($0.3m) sectors.

On the local front, selling was reported by insurance ($3.3m) and mutual funds ($2.4m).

The average daily volume clocked in at 166m shares, down 9pc from a week ago. The average daily value traded settled at $26m, down 13pc from the preceding week.

According to AKD Securities, the easing off in international commodity prices, particularly oil, is expected to be a welcome development going forward. It’ll cause the pressure on the country’s external account to recede.

On the flip side, the strength in the dollar following the 75-basis-point policy rate increase in the United States is expected to put pressure on the exchange rate, which could hurt sentiments.

“We advise clients to stay cautious while building new positions in the market,” it added.

Published in Dawn, September 25th, 2022

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