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PSX weekly review: Bulls dominate as KSE-100 index shoots past 42,000 mark

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  • KSE-100 index gains 1,946 points.
  • Finishes four out of five sessions in green.
  • Interest in main board sectors kept  market buoyant.

KARACHI: The Pakistan Stock Exchange (PSX) recouped losses from the previous week with the benchmark KSE-100 index gaining 1,946 points or 4.9% to settle at 42,096.24. Trading remained volatile throughout the week with the index finishing four out of five sessions in the green.

PSX weekly review: Bulls dominate as KSE-100 index shoots past 42,000 mark

Interest in main board sectors kept the market buoyant as investor participation remained strong. The index maintained a healthy momentum on back of trade deficit and strengthening rupee against the US dollar. Additionally, sector-specific developments also spurred buying interest in select stocks, which further fuelled the rally. 

The market commenced the week on a negative note as inflation for the month of July 2022 came in at 24.9%, — highest level in last 14 years.

Fortunately, tables turned and the sentiment turned positive after the International Monetary Fund (IMF) announced that Pakistan had fulfilled the last remaining pre-requisite for the loan (incremental hike in petroleum development levy on MS and hi-speed diesel).

With this renewed hope, the Pakistani rupee strengthened against greenback, gaining Rs15.33, or 6%, week-on-week to close at Rs224.04 this week.

Furthermore, trade deficit significantly declined in July, down by 47% month-on-month. Moreover, reduction in international oil prices post OPEC+ meeting (WTI trading below $88 per barrel compared to $98.62 per barrel last week) further cemented the ground for bulls.

Other major developments during the week were: ministry agreed to increase oil marketing companies margin on MS (petrol), hi-speed diesel, SBP’s forex reserves fell $190 million to $8.4 billion, banks give Rs298 billion financing in PIB auction, refineries’ gross margin declined 83% in August, and oil sales in July 2022 clocked in at the lowest level since February 2021.

Meanwhile, foreign selling this week clocked in at $0.69 million against a net buy of $0.57 million recorded last week. Selling was witnessed in banks ($0.9 million), and fertiliser ($0.6 million).

On the domestic front, major buying was reported by brokers proprietary ($2.2 million), followed by mutual funds ($1.6 million).

During the week under review, average volumes clocked in at 263 million shares (up by 75% week-on-week), while average value traded settled at $34 million (up by 56% week-on-week).

Major gainers and losers of the week

Sector-wise positive contributions came from banks (+427 points), cement (+421 points), fertiliser (+112 points), chemical (+111 points), and oil marketing companies (+106 points).

On the flip side, negative contributions came from close-end mutual fund (-3 points), and real estate investment trust (-1 points).

Scrip-wise major gainers were Luck Cement (+155 points), UBL (+124 points), MCB (+87 points), PSO (+78 points), and Colgate-Palmolive (+73 points).

Meanwhile, major losers were Faysal Bank (-10 points), Mari Petroleum (-6 points), Interloop (-4 points), and Adamjee Insurance Company (-3 points).

Outlook for next week

A report from AHL predicted: “We expect the market to remain in the green zone given hopes on loan disbursement from IMF once approval is granted by the Executive Board.”

“Moreover, with the ongoing result season, certain sectors and scrips are expected to stay under the limelight given anticipation of robust results,” it said, advising investors to cherry-pick fundamentally strong blue-chip stocks.

“The KSE-100 is currently trading at a PER of 4.3x (2022) compared to the Asia-Pacific regional average of 12.5x while offering a dividend yield of 8.9% versus 2.8% offered by the region,” the brokerage house stated.

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Pakistani stocks are rising, and the KSE-100 breaks the 69,000 barrier.

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The benchmark KSE-100 Index increased 1.76 percent on Monday, passing beyond the 69,000 barrier for the first time in its history. This maintained Pakistani stock market’s record-breaking run, as investors remained upbeat about potential rate cuts by the central bank.

The most recent advances also follow Prime Minister Shehbaz Sharif’s iftar dinner given by Saudi Crown Prince Mohammed bin Salman in Makkah, at a time when Riyadh is anticipated to announce an approximately $1 billion investment in Reko Diq, one of the world’s greatest reserves of copper and gold.

After reaching a high of 69,720.03, the KSE-100 Index concluded at 69,619.98 with a net gain of 1,203.20 points by the time trading was closed for the day. This was due to international investors, both individual and institutional, making purchases.

The meeting between Shehbaz and the Saudi crown prince, also referred to as MBS, may open doors for investment in a variety of industries, including mining, energy, and agriculture.

With record-high energy and interest rates driving up the cost of conducting business to an unaffordable level, investors are clamoring for foreign investment to prop up the economy.

Any improvement in this area would not only contribute to the rupee’s appreciation but also increase the value of cheap equities due to the anticipated purchasing frenzy, as buyers will not pass up the chance to purchase at the reduced prices.

However, there is a big question mark over the heightened expectations that the State Bank of Pakistan will begin reducing interest rates following the consumer price index (CPI) showing a steady fall in inflation over the past three months, particularly the greater than anticipated decline in March.

The reason is that, given Islamabad’s desperation to secure another package from the Washington-based lender, there is an impending hike in gasoline costs in addition to power and gas charges. This move will further sustain the inflationary pressure under the IMF criteria.

Meanwhile, the most recent US data has reduced expectations for potential rate reduction by the Federal Reserve, which is driving up the price of gold as speculative purchasing occurs.

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The price of gold is still rising in Pakistan.

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24 carat gold’s per tola pricing increased by Rs 600 on Monday, when it was sold for Rs 245,700 as opposed to Rs 245,100 the day before.

Ten grams of 24 carat gold cost Rs 514 more than the selling price of Rs 210,648; ten grams of 22 carat gold cost Rs 193,094 instead of Rs 192,622, according to the All Sindh Sarafa Jewellers Association.

Silver prices per tola and per ten grams stayed at Rs 2,650 and Rs 2271.94, respectively.

Get out of silence
According to the Association, the price of gold went up $5 to $2,355 on the global market from $2,350.

24 carat gold saw a rise in prices per tola on April 6 of Rs 4,900. It was sold on Saturday for Rs 245,100 as opposed to Rs 240,200 the day before.

The price of 10 grams of 24 carat gold went up by Rs4,200, and it was sold for Rs210,134 as opposed to Rs205,932. The price of 10 grams of 22 carat gold went up to Rs192,622 from Rs 188,772, according to the All Sindh Sarafa Jewellers Association.

Silver prices per tola and per ten grams stayed at Rs 2,650 and Rs 2271.94, respectively.

According to the Association, the price of gold went up $44 to $2,350 on the global market from $2,306.

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PIA privatization: “Investors from Saudi Arabia and Qatar are briefed by Pakistan.”

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According to information provided, investors in the aviation industry in Qatar, Abu Dhabi, and Saudi Arabia were approached and given a briefing on the privatization of PIA.

According to additional sources, investors received information about “profitable” investments in the international lines operated by FIA and PIA.

Since National Airline’s debts and losses were transferred to the withholding firm prior to privatization, all of them have been paid off.

According to the sources, every obstacle to the PIA’s privatization has been removed.

It is important to note that, as the government moves on with its privatization plan, up to three Gulf nations—the United Arab Emirates, Saudi Arabia, and Qatar—have expressed interest in purchasing the financially troubled Pakistan International Airlines (PIA), according to sources.

Previously, purchasers were asked to submit proposals by May 3 for the privatization of Pakistan International Airlines (PIA).

The Pakistani government intends to sell 51 percent of the national flag carrier’s shares; the remaining 49 percent will be owned by the government. The government’s goal is to privatize solely the PIA’s aviation department.

According to the officials, the business that purchases the 51 percent of the shares would continue to hold administrative authority over PIA.

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