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In line with the trend seen the week before, tumultuous trading remained the norm on the Pakistan Stock Exchange (PSX) as the index slipped into the red amid low investor interest for the second week in a row. The benchmark KSE-100 fell 382.17 points or 0.9% on weekdays to 40,187.18 points.

The downward trajectory was seen as a result of various developments that took place during the week. Participants reacted negatively to the increase in coronavirus cases, raising concerns about another lockdown.

Despite some positive developments on the horizon, the stock market has failed to turn green. The encouragement of foreign direct investment (FDI) and the current account surplus for the fourth consecutive month did not boost investor confidence.

According to data released by the State Bank of Pakistan (SBP), Pakistan received a 10-month high foreign investment of $ 317.4 million in October, while the current account surplus increased fivefold. to reach $ 382 million in October from $ 73 million in 2019..

However, the developments have failed to attract market players.

The week began with bears maintaining a grip on the local stock exchange as investors reacted with panic to the increase in coronavirus cases – locally and globally.

The market got a respite from the selling pressure on Tuesday as the benchmark ended on a slightly positive note following a rally in global markets following the announcement of another vaccine Covid-19. The American company Moderna has claimed that its Covid-19 vaccine was 94.5% effective in clinical trials, which led to bullish sentiment in international stock markets.

However, the mood was tempered on Wednesday by concerns over the arrival of the International Monetary Fund (IMF) mission in Pakistan. Prime Minister’s adviser on finance and revenue Dr Abdul Hafeez Shaikh during the week revealed that an IMF mission will visit Pakistan in a few weeks to finalize a deal. The news was met with a rather lukewarm response as the resumption of the IMF’s lending program would require an upward adjustment in the electricity tariff as well as a reduction in subsidies.

The local stock market continued to experience volatile trading on Thursday, but bullish balance of payments data and improving foreign exchange reserves cushioned the pullback and helped the index end slightly higher. Unfortunately, the trend reversed again on Friday as the index fell into negative territory ahead of the next monetary policy announcement, scheduled for tomorrow (November 23).

On the political front, uncertainty prevailed as opposition political parties remained restless. Moreover, Pakistan Tehreek-e-Insaf (PTI) won a dominant majority in the Gilgit-Baltistan elections, which also prompted investors to stay on the sidelines.

Market activity suffered during the week under review, with average daily volumes falling 41% to 171 million shares, while the average traded value plunged 34% to $ 44 million.

In terms of sectors, the negative contributions come from fertilizers (94 points), oil and gas exploration companies (81 points) and cement (67 points). On the other hand, significant sector gains were observed in the banks (28 points).

In terms of script, negative contributions were made by DAWH (68 points), OGDC (45 points) and SYS (44 points). Meanwhile, the positive contributions were made by UBL (55 points) and MEBL (15 points). Foreign sales continued this week at $ 6.6 million, compared to a net sale of $ 7.4 million last week. The sale was seen in commercial banks ($ 4 million) and in cement ($ 2.1 million). Domestically, large purchases were reported by individuals ($ 6.5 million) and businesses ($ 4.3 million).

Other big news of the week included; SBP predicts growth of 1.5-2.5% for fiscal 21, specific funding approved to obtain an effective vaccine against Covid-19, government cracked down on circular debt to offset budget pressure, foreign exchange reserves of the central bank hit a 2.5-year high – reaching $ 12.9 billion, Pakistan and Russia signed amended gas pipeline agreement.

Posted in The Express Tribune, November 22nd, 2020.

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