KARACHI: Trading on the national bourse opened on a negative note in the outgoing week owing to profit-taking by investors.

Arif Habib Ltd said the Staff Report released by the International Monetary Fund (IMF) hinted at keeping the monetary policy tight, which divided market sentiments about the interest rate in the coming months.

However, bulls took over on Wednesday as the country posted a fourth consecutive monthly surplus in its current account amounting to $334 million in June.

In addition, the announcement about a $600m rollover from China further boosted investors’ confidence. Foreign exchange reserves of the State Bank of Pakistan (SBP) climbed up to $8.7 billion, a level last seen in October 2022, owing to substantial inflows from the IMF, Saudi Arabia and the United Arab Emirates.

Market participants welcomed the jump in the SBP reserves, causing the index to cross the 46,000-point level in intraday trading on Friday — a level previously witnessed on April 25, 2022.

Meanwhile, the rupee depreciated during the week against the dollar by closing at 286.81, down 3.21 per cent on a weekly basis.

As a result, the KSE-100 index closed at 45,921 points, up 853 points or 1.9pc from a week ago.

Sector-wise, positive contributions came from banks (768 points), exploration and production (95 points), food and personal care (24 points) and oil marketing (22 points).

Sector that contributed negatively to the index were pharmaceutical (33 points), fertiliser (28 points) and miscellaneous (19 points).

Scrip-wise, positive contributors were United Bank Ltd (308 points), MCB Bank Ltd (126 points), Meezan Bank Ltd (85 points), Bank AL Habib Ltd (80 points) and Pakistan Oilfields Ltd (69 points). Negative contributions came from Engro Corporation Ltd (31 points), Systems Ltd (15 points), Cherat Cement Company Ltd (15 points), Pakistan Services Ltd (14 points) and Highnoon Laboratories Ltd (12 points).

Foreign buying settled at $5.4m versus a net buy of $1m a week ago. Major buying was witnessed in banks ($2.2m) and exploration and production ($1.2m). On the local front, selling was reported by mutual funds ($5.8m) and “Other organisations” ($1.9m).

The average daily volume arrived at 357m shares, down 19pc from a week ago. The average value traded settled at $32m, down 28pc on a week-on-week basis.

According to AKD Securities, the stock market is expected to maintain a positive outlook owing to strengthening foreign exchange reserves and positive economic developments. However, upcoming results may exert pressure on the bullish sentiment.

“We advise investors to take a prudent approach to the stock selection and recommend focusing on stocks with strong financials, dollar-denominated revenue streams (tech and exploration and production) or companies with healthy dividend-yields,” it said.

Published in Dawn, July 23th, 2023