KARACHI: Trading in the stock market commenced on a positive note in the outgoing week after the caretaker prime minister announced that Saudi Arabia is expected to invest $25 billion in Pakistan.

Arif Habib Ltd said the rupee witnessed a sharp rise in the open market after a crackdown began against foreign currency smugglers, leading to a boost in investors’ confidence in the local bourse.

Furthermore, data on cotton arrival showed a 98 per cent year-on-year increase, with production settling at 3,041,000 bales on Aug 31. The offtake of urea and di-ammonium phosphate (DAP) saw jumps of 18pc and 10 times, respectively, compared to the previous year in August.

In addition, petrol and diesel sales increased 5pc and 11pc year-on-year, respectively, last month. Similarly, cement despatches rose 37pc year-on-year in August.

Rising rupee strengthens confidence in equity market

However, a massive jump in the cut-off yields of treasury bills signalled a possible hike in the key interest rate in the meeting of the Monetary Policy Committee (MPC) next week, keeping the sentiment in the stock market in check. The rupee-dollar parity settled at 302.95, appreciating by 0.82pc from a week ago.

As a result, the KSE-100 index closed at 46,013 points after gaining 701 points, or 1.5pc, from a week ago.

Sector-wise, positive contributions came from fertiliser (171 points), exploration and production (94 points), oil marketing (78 points), commercial banking (77 points) and power (74 points).

Sectors that contributed negatively were pharmaceutical (12 points) and automobile assembling (four points).

Scrip-wise, positive contributors were Dawood Hercules Corporation (102 points), Pakistan Petroleum (85 points), Engro Corporation (58 points), Meezan Bank (52 points) and the Hub Power Company (47 points).

Negative contributions came from Bank Al Habib (44 points), Lucky Cement (36 points), Indus Motor (17 points), Pakistan Oilfields Ltd (15 points) and Habib Metropolitan Bank Ltd (12 points).

Foreign buying continued during the outgoing week, totalling $0.6 million compared to a net purchase of $3.3m the previous week. Major buying was witnessed in the commercial banking sector ($1.2m) and the exploration and production sector ($0.7m). On the local front, selling was reported by mutual funds ($2.5m) and banks ($1.5m).

The average daily volume arrived at 146m shares, down 31pc from a week ago. The average daily value traded settled at $17m, down 36pc week-on-week.

According to AKD Securities, the stock market is expected to remain range-bound going forward as the outcome of the upcoming meeting of the MPC on Sept 14 will determine the mood of investors.

“Furthermore, the government’s steps towards energy reforms and the next review with the International Monetary Fund will clear the market’s outlook. We continue to advise investors to remain cautious while taking positions in companies with strong fundamentals or high dividend-yielding scrips,” it added.

Published in Dawn, September 10th, 2023