Karachi, July 21, 2023 (PPI-OT): Bulls remain in charge, KSE-100 up 2% WoW
Week started on a dull note but investor optimism eventually picked up. KSE-100 index closed the week at 45,921, up 853 points WoW. Sector wise, Banks (7.2% WoW), Transport (2.6% WoW) and OMC Sector (2.2% WoW) outperformed during the week. On the economic front, IMF released its latest Staff Report for Pakistan during the week, where it discussed the country's performance, key targets and recommendations on important macro fronts. The report is released post agreement to support Pakistan through a Stand-By Arrangement of US$3bn, for 9 months.
In addition to higher CPI expected for next year, the report highlights SBP's need to continue the tightening cycle to re-anchor inflation expectations. Following the agreement with IMF, Pakistan has received a combined sum of US$3bn from Saudi Arabia and the UAE. When adding the IMF's tranche, this resulted in the State Bank of Pakistan's foreign exchange reserves reaching US$8.7 billion, as per latest data shared by the SBP. SBP reserves experienced a significant week-on-week surge of US$4.2bn. On the sectoral front, E and P companies raised concerns about a severe cash flow crisis where the situation has been exacerbated by the default of Sui companies on payments totaling Rs1,317bn. As a result of this, profit taking was witnessed in E and P stocks in the later part of the week.