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Stock market gains 1.7% on budget optimism

Stock market Benchmark KSE-100 index surpassed the 42,000 mark and closed the week in the green
Bulls dominated the Pakistan stock market going out of the week as investors remained optimistic and the trading week started on a positive note amid the federal budget announcement.

Investors took up new positions and cherry-picked stocks as the week started with positive news that the government is setting a fiscal 2023 fiscal deficit target at a lower level of 5%.

However, many investors preferred to remain on the sidelines ahead of the budget announcement that sent the stock market down. The market continued to lose hope in the devaluation of the rupee against the US dollar and news of new taxes proposed in the upcoming budget.

In addition, uncertainty about the IMF’s lending program and the decline in foreign exchange reserves weighed heavily on investor sentiment.

However, the situation changed and an uptrend gripped the stock market as investors remained optimistic about the upcoming budget announcement.

The bulls pushed the stock market above 42,000 points and ended the week in the green.

Topline Securities said in its report that the benchmark KSE-100 index was up 1.7% week-on-week.

The gains come on the back of the government’s determination to take reform measures (introducing new taxes and cutting subsidies) in the FY23 budget.

Investors preferred to stay on the sidelines ahead of the FY23 budget announcement as during the week the average daily trading volume and value rose 19% and 27% to 169.8m shares and Rs4.4 crore respectively. went back.

At the end of the week, foreign companies, foreign Pakistanis, and mutual funds sold net worth of shares of $3.78 million, $2.52 million, and $2.08 million, respectively. However, the sale was absorbed by local companies as they bought a net $8.6 million worth of shares.

JS Global said Pakistani stocks ended the week up at 42,015, up 1.7% on the previous week.

The market maintained an uptrend throughout the week, partially recovering from last week, it said. Investors remained focused on the FY23 federal budget announced on June 10.

The oil and gas sector was among the key outperformers for the week, followed by cement and chemicals, while banks were among the underperformers due to the expected introduction of taxes in the federal budget.

On the news front, cement sales declined 6% mom due to the slowdown in construction activity, while textile exports in May 2022 registered 59% YoY growth.

The national debt rose 12.9% to Rs.43.7 trillion in July-April FY22. Additionally, RDA inflows increased to $4.4 billion by May 2022 compared to $4.2 billion last month.

On the external front, SBP’s reserves slipped to a low of $9.2 billion, falling $497 million week-on-week, while on the international front, crude hit a 13-week high and peaked above $120 partly due to the expectation of higher demand from China.

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