- ‘With SBP raising the key discount rate by 50bps, leveraged sectors such as cement, steel, fertilizers, oil manufacturing companies and textiles may come under pressure’
The Pakistan Stock Exchange (PSX) remained range-bound during the week as development arising with respect to potential conditions attached to the upcoming International Monetary Fund (IMF) package compelled investors to maintain a wait-and-watch approach, a private media outlet reported.
The IMF mission chief paid a visit to Pakistan during the week, where discussions with the government officials mainly surrounded the current economic scenario of Pakistan; while the finance minister expects the bailout package by mid-May.
Market activity improved during the week with a daily average of 128 million traded shares as compared to a daily average of 84 million shares last week.
Overall, after making a high and a low of 38,965 and 38,129 points, respectively, the market ended the week at 38,649 level, gaining 117 points or 0.3pc on a week-on-week basis.
Meanwhile, the State Bank of Pakistan (SBP) issued its second quarterly report of FY19, where it revised its projection for real GDP growth downward by 50 basis points to 3.5pc–4.0pc.
News flows regarding the gas utility companies seeking hefty tariff hike from next fiscal year kept prices of the Sui companies higher than the previous week’s close. Other key developments during the week included (1) SBP, in line with market expectations, increased its policy rate by 50 basis points to 10.75pc (after Friday’s market close), (2) Finance Minister Asad Umar said the government subsidy on gas and electricity will not be withdrawn together, (3) Gwadar terminal developer is planning an IPO for a $85 million project, (4) the government will launch second Rs200 billion Sukuk to ease power debt, (5) the government is eyeing $2 billion from Haveli and Balloki power plants sell-off, and (6) Pakistan will now file a fresh report with Financial Action Task Force (FATF) by April 15.
“We expect the market to remain range bound in the upcoming week amid lack of triggers,” said an analyst from Arif Habib Limited. “With the SBP raising the key discount rate by 50 basis points, leveraged sectors such as cement, steel, fertilizers, oil manufacturing companies and textiles may come under pressure while banks could support the index.”
An analyst from Habib MetroFinancial Services said that the market is expected to remain in the consolidation mode over the short term, as rising POL prices along with dwindling PKR value warrant yet another increase in the cost of doing business. He suggested the investors tilt portfolio exposure towards blue chips.