The stock market gains 1.7% thanks to budgetary optimism

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CARACHI:

Bulls have dominated the Pakistan Stock Exchange over the past week as investors remain bullish and start the trading week on a positive note amid the federal budget announcement.

Investors took new positions and opted to pick stocks at the start of the week on positive news that the government was setting the fiscal deficit target below 5% for fiscal 2023.

However, many investors preferred to stay away before the budget announcement due to which the stock market fell. The market further lost hope on the depreciation of the rupiah against the US dollar and news of new taxes proposed in the upcoming budget.

In addition, the uncertainty surrounding the IMF’s loan program and the drop in foreign exchange reserves have seriously shaken investor sentiment.

However, the situation changed and a bullish period gripped the stock market as investors remained optimistic about the upcoming budget announcement.

The bulls propelled the stock market above 42,000 points to end the week in the green zone.

Topline Securities, in its report, said the benchmark KSE-100 index gained 1.7% on a weekly basis.

The gains can be attributed to the government’s determination to take reform measures (imposition of new taxes and reduction of subsidies) in the FY23 budget, which will pave the way for the IMF program, where progress in staff are expected by next week, Topline says.

Investors preferred to stay on the sidelines ahead of the FY23 budget announcement as during the week average daily volume and value traded fell 19% and 27% to 169.8 million of shares and 4.4 billion rupees respectively.

By the end of the week, Foreign Companies, Overseas Pakistanis and Mutual Funds sold shares with a net worth of $3.78 million, $2.52 million and 2, 08 million dollars respectively. However, the sale was absorbed by local businesses who purchased shares with a net worth of $8.6 million.

JS Global said Pakistani stocks ended the week on a positive note at 42,015, up 1.7% week-on-week.

The market maintained an upward trend throughout the week, partially recovering from last week, he said. Investors remained focused on the federal budget for fiscal year 23, announced on June 10.

“The main challenge appears to be the need to tighten the fiscal position, where recent interviews with officials and other media suggest that in addition to containing spending and subsidies, increasing revenue collection will be a key theme. “said Wasil Zaman, an analyst at JS Global. .

The oil and gas sector was among the main outperformers during the week under review, followed by the cement and chemicals sectors, while the underperformers included banks due to the anticipation of the imposition of taxes. in the federal budget.

On the news front, cement sales fell 6% month-on-month due to slower construction activity, while textile exports recorded 59% year-on-year growth in May 2022.

Government debt soared by 12.9% to Rs 43.7 tr in July-April FY22. Additionally, RDA inflows reached $4.4 billion in May 2022, up from $4.2 billion last month.

On the external front, SBP reserves crashed to $9.2 billion, falling $497 million week-over-week, while on the international front, crude oil hit a high of $497 million. 13 weeks, hitting $120+ in anticipation of increased demand from China, among other reasons. .

Published in L’Express Tribune, June 12e2022.

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