KARACHI: The stock market managed to close the topsy-turvy week in the green.

Heralding political stability after Shehbaz Sharif took oath as the 24th prime minister of Pakistan, the market staged a robust rally of 626 points in the first session of the outgoing week which propelled the benchmark KSE 100-share index briefly above 66,000 points but settled below this level.

However, the market in the subsequent three sessions suffered mild losses as a falling rupee and surging external debts amid uncertainty about new conditions by the International Monetary Fund (IMF) triggered nervous selling by a section of investors.

Mr Shehbaz, after assuming responsibilities as head of the government, immediately issued directions to his finance team to start preparations for engaging the IMF for the final review under the current $3bn Stand-By Arrange­ment and negotiating a fresh longer-term Extended Fund Facility which is direly needed to tackle the country’s balance of payments crisis.

However, the IMF is awaiting a formal request from the government which is in the process of finalising its cabinet members, more crucially the finance minister, to lead the talks.

The IMF has already proposed the liberalisation of imports and a doubling of taxes for both salaried and non-salaried individuals to the Federal Board of Revenue. Additionally, it recommends raising the general sales tax rate to 18pc for various essential items such as unprocessed food, stationery, medicines and POL products.

On the economic front, Arif Habib Ltd said the government raised Rs527 billion through the auction of market treasury bills at slightly reduced rates in the outgoing week. Furthermore, textile exports climbed up by 20 per cent year-on-year to $1.4bn in February.

Moreover, remittances increased by 13pc year-on-year to $2.2bn in February. In addition to this, the SBP reserves fell by $54m to $7.9bn in the week ending on Feb 29. The rupee appreciated by 15 paise or 0.05pc to Rs279.04 against the US dollar week-on-week.

As a result, the KSE 100 index closed at 65,794 points after adding 468 points or 0.7pc week-on-week.

Sector-wise positive contributions came from oil & gas exploration (217 points), refinery (105 points), fertiliser (76 points), power generation & distribution (61 points) and cement (61 points). Meanwhile, the sectors which mainly contributed negatively were commercial banks (210 points), chemicals (23.11 points), and tobacco (18 points). Scrip-wise positive contributors were Dawood HerculesCorporation Ltd (175 points), Oil and Gas Development (164 points), Pakistan Petroleum (89 points), Hub Power Company (62 points) and National Refinery Ltd (46 points). Meanwhile, scrip-wise negative contributions came from Meezan Bank Ltd (93 points), Fauji Fertiliser Company (65 points), Habib Bank Ltd (47 points), Bank Alhabib Ltd (44 points) and Engro Corporation (42 points).

Foreign buying continued during the outgoing week, clocking in at $6.3 million compared to a net buy of $10.4m in the preceding week. Major buying was witnessed in commercial banks ($7.9m) and fertiliser ($0.5m). On the local front, selling was reported by Companies ($6.8m) followed by insurance companies ($0.7m). Average volume showed a light rise of 1.6pc to 425m shares while the average value traded rose 6.4pc to $59m week-on-week.

According to AKD Securities Ltd, the Monetary Policy Committee meeting on March 18 would remain in the limelight. Although with prevailing consensus of the status quo, the market would likely remain largely unaffected as this expectation is already priced in. However, if there is any surprise cut, it could unlock funds towards debt-heavy cyclical sectors.

Additionally, the imminent announcement of the federal cabinet in the coming week holds significance, with progress on the IMF’s SBA final tranche of $1.1bn as a near-term focal point and a potential positive in sight.

Published in Dawn, March 10th, 2024