January 29, 2023

Eyesurgmi

The Joy Of Businnes

Trade deficit shrinks by 46.77% MoM in July: PBS

August 2, 2022 (MLN): July has been a tough month for Pakistan stock market. Although Pakistan and IMF reached staff level agreement during the month, investors’ sentiments remained subdued as heightened political noise and worsened economic outlook caused severe uncertainty in the stock market, leading the benchmark KSE100 index to settle at 40,150 level, down by 1,390 points or 3.35% MoM.

In USD terms, the index plunged massively by 17.3% MoM, the lowest since March 2020, as the local currency has shed more than 14% of its value against US dollar in July.

“As economic conditions tailspin, domestic businesses appear anxious over rising cost push inflation, whereby major sectors remain wary of the ability to completely pass on the impact in the backdrop of compressing domestic demand”, analyst at Arif Habib Limited said.

By mid of the month, the benchmark index took a sigh of relief as the government reached a staff level agreement with the IMF which paves the way for disbursement of
$1.2bn, subject to approval of the IMF’s Executive Board.

However, political noise and concerns over its impact on macros once again triggered shortly after Supreme Court’s verdict regarding CM Punjab came in favour Pakistan Muslim League (Q) leader Pervaiz Elahi, an ally of former PM Imran Khan. This development overshadowed the key milestone of the IMF staff level agreement.

Besides, higher interest to 15%, rapid reserve depletion amid soaring current account deficit along with debt payments, rising bond yields in international market put a strong downward pressure on the market.

Sector-wise analysis reveals that the major downside to the benchmark KSE100 index came from Fertilizer with 461 points followed by Cement, Automobile Assembler, Power Generation & Distribution Companies, and Banks with 185, 112, and 103 points respectively. In particular, the scrips of ENGRO (-180 points), EFERT (-146 points), LUCK (-134 points), FFC (-118 points), and EPCL (-107 points) turned out to be the most disappointing ones.

On the other hand, Technology, Oil & Gas Marketing Companies, and Real Estate Investment Trust emerged as the best-performing sectors during July, as they added around 235, 35, and 12, respectively to the benchmark index. To be specific, the scrips of TRG (528 points), SYS (74 points), MEBL (56 points), LOTCHEM (56 points), and FABL (33 points) turned out to be the most pleasing ones.

Meanwhile, the All-Share Market Cap decreased by nearly Rs184.6 billion, i.e., 2.65% lower than June 2022.

Flow-wise, foreigners turned net buyers this month, purchasing $7.48mn worth of equities during the month with major buying was witnessed in Technology ($6.3mn) and Textile ($0.94mn) sectors.

On the other end of the spectrum, Mutual Funds, Insurance Companies, and Brokers remained the aggressive sellers as they offloaded $11.9mn, $8.4mn, and $3mn worth of equities, respectively. However, Individuals and Companies increased their exposure by around $8.6mn, and $3.8mn, respectively.

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