November 01, 2023 (MLN): The benchmark KSE-100 Index wrapped up the month of October at 51,920, gaining a staggering 5,688 points or 12.30% MoM, showcasing bulls’ continued dominance throughout the month.

To note, this was the highest-ever monthly close for the KSE-100 index in history.

The average KSE-100 daily volumes during the month surged by 2.49x MoM to 189.43 million shares as compared to the 76.15m shares in the previous month.

Similarly, the average daily traded value rose by 91% MoM to Rs8.56bn compared to Rs4.48bn in the previous month.

While the returns in US Dollar terms were around 14.8% due to the appreciation of the PKR, which gained 2.2% against the USD during the review month.

Following a rough year, the economy has started to show some early signs of improvement.

Towards the end of FY23, Pakistan secured a $3 billion Stand-By Arrangement (SBA) from the International Monetary Fund (IMF), which saved the cash-strapped nation that was on the brink of default.

The initial disbursement of $1.2bn under the SBA in July 2023, alongside $3bn bilateral inflows from the Arab countries gave a substantial boost to the depleting foreign reserves held by the country.

Consequently, in the current fiscal year, total liquid foreign reserves have increased by $3.5bn or 38.16%.

Furthermore, the government-backed administrative measures have helped the Pakistani Rupee (PKR) to completely recover all year-to-date losses against the USD and strengthen significantly to 281 per USD.

This was coupled with strong company earnings for the quarter, alongside the market's anticipation of interest rates and inflation having peaked out.

To recall, the last T-Bills auction held on October 18 indicated that the market was heavily pricing in the peak of interest rates.

The auction witnessed an unprecedented level of participation in the 1-year T-Bills, with the State Bank of Pakistan (SBP) receiving bids worth Rs2.155 trillion.

This suggested that the market was anticipating a relatively stable or downward trend in interest rates.

To note, the central bank has kept the policy rate unchanged at 22% since June 2023, foreseeing the downward trend in inflation.

During the fiscal year, the KSE-100 has gained 10,468 points or 25.25%, whereas the ongoing calendar year has witnessed a cumulative increase of 11,500 points, equivalent to 28.45% in the KSE-100.

The index stands just 2.32% shy of its all-time high of 53,127 points that was set in 2017.

Foreign and Local Investors Portfolio Investments (LIPI, FIPI)

The dominant buyers during the month were companies, with a significant net investment of $13.7 million. They allocated the majority of their capital, $4.19m, to the cement sector, while divesting from the commercial banks, amounting to $1.66m in sales.

On the flip side, the leading sellers were foreign corporates, with a net sale of $8.42m, signifying a substantial divestment from their portfolio investments. Their most substantial sales activity was also in the commercial banks sector, amounting to $5.76m, while they made acquisitions in the technology sector worth $1.85m.

Outlook

Over the next few months, the local stock market is anticipated to maintain its upward momentum, potentially reaching a new all-time high in November.

The successful completion of the IMF review is crucial. The remaining amount of $1.8bn under SBA is phased over the program's duration, subject to two quarterly reviews, with the next review starting from November 02, 2023.

Inflation is also expected to start steadily declining, with a potential rate cut by the end of the first quarter of 2024.

Copyright Mettis Link News

Posted on: 2023-11-01T11:28:02+05:00