PSX weekly roundup: record-breaking rally ends after IMF loan approval

KARACHI: Pakistan’s Stock Exchange (PSX), which had been on a record-breaking run, experienced a sharp decline during the outgoing week losing 782 points, or 1.0 per cent, ending the week at 81,292.13 points.

Following the approval of a $7 billion loan package from the International Monetary Fund (IMF), the benchmark KSE-100 index posted a sharp decline. The well-known “buy the rumour, sell the news” trend appeared to take hold as investors cashed in profits after the highly anticipated announcement, Mettis Global reported.

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In US dollar terms, the market recorded a loss of 0.9 per cent. This comes after the IMF’s Executive Board on Wednesday approved a 37-month Extended Arrangement under its Extended Fund Facility (EFF), with an immediate disbursement of roughly $1 billion.

Investors had heavily bought into stocks leading up to the approval, driving the market to new highs earlier in the week. However, following the news, the index closed lower on both Thursday and Friday. Throughout the week, the market traded within a range of 1,798 points, touching the week’s highest at 82,906 points (up 831 points) and lowest at 81,107 points (down 967 points).

The stock exchange saw a decline in activity, with average daily trading volumes dropping by 16.7 per cent to 391.07 million shares, while the total traded value fell by 8.0 per cent week-on-week to Rs 16.94 billion. Overall market capitalisation fell by $222.22 million (0.6 per cent) to $38.37 billion in dollar terms, and Rs. 10.65 trillion in local currency, Mettis Global’s report said.

The sectors causing the most downward pressures on the market were power generation and distribution, oil and gas exploration, technology and communication, oil marketing, and textile. On the other hand, fertilisers, commercial banks, leather, auto parts, and pharmaceuticals provided positive impetus to the bourse through the weeek.

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Foreign investors continued to be net sellers for the fourth consecutive week, offloading $12.44 million worth of equities. Analysts attribute this ongoing sell-off to the recent FTSE rebalancing, which downgraded Pakistan from Secondary Emerging to Frontier Market status in July. FTSE Russell is a London-based stock markets indexing company.

While foreign corporates led the selling with net sales of $13.22 million, mutual funds were the main buyers, investing a net $16.21 million during the week.