KARACHI: Pakistan Stock Exchange (PSX) remained under pressure last week amid political uncertainty and law and order situation and the benchmark KSE-100 Index lost 754.4 points (-1.79 percent) to close at 41,487.6 points.
The Supreme Court may take up the Punjab election case this week and the ruling parties are set to stage a sit-in in front of the apex court. Under these circumstances, the political temperature is unlikely to subside and this may not be a good sign for the bourse, as market sentiment will be heavily influenced by political developments.
After a rise of 1.59 percent by the benchmark index in the preceding week, the market closed red in the first three days of the week; however, the trading during the last two sessions helped recoup some of the losses.
Among other indices, the KSE All Share Index fell by 1.69 percent to 27,406.52 points from 27,876.27 points, while KMI All Share Islamic Index decreased by 2.16 percent to 19,771.47 from 20,208.75 points on a week-on-week basis.
The benchmark index commenced the week with a dip when bears took control of the market over growing political turbulence and persistent delay in reviving the IMF programme, which dragged the index below the 42,000 mark to 41,829.49 points, shedding 412.49 points (-0.99 percent). The situation remained the same on Tuesday due to the arrest of former prime minister Imran Khan and KSE-100 Index shed 455.68 points (-1.09 percent) to close at 41,373.81 points. The losing streak continued on Wednesday and the index was deprived of another 298.86 points (-0.72 percent) to reach 41,074.95 points.
The market turned positive on Thursday amid hopes of revival of the International Monetary Fund (IMF) loan programme and gained 250.68 points (+0.61 percent) to close at 41,325.63 points. The winning streak continued on Friday and the index gained 161.95 points (+0.39 percent). However, volumes remained low during both of the sessions.
According to JS Global analyst Muhammad Waqas Ghani, the market closed negative in the outgoing week, losing 754 points over growing political temperature and delay in completion of IMF’s ninth review. “Investors chose to stay on the sidelines as a result of the former premier’s arrest and the subsequent nationwide violent protests,” he said.
On a week-on-week basis, the oil exploration and production sector went down by 6 percent and the tech sector witnessed 3.5 percent dip. Positive contributions came from tobacco and modaraba sectors.
Arif Habib Limited, in its report, said that the stock market commenced trading on a negative note on Monday as Fitch Ratings revealed that Pakistan was facing a substantial debt payment of $3.7 billion in the May-June period. Moreover, Pakistan was not on the agenda of IMF meetings, which dampened hopes for the resumption of the loan programme. Furthermore, the arrest of ex-PM Imran Khan sparked protests across the country, leading to political instability. However, as the week progressed, the political situation relatively eased.
The benchmark KSE-100 index is currently trading at a price-to-earnings ratio (PER) of 3.9x (2023), which is comparatively lower than the Asia Pacific regional average of 12.3x. Additionally, it offers a higher dividend yield of 11.9 percent compared to the region’s 3.0 percent.
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