Karachi, July 29, 2022 (PPI-OT): Index stays range-bound over macro concerns

Political uncertainty and deteriorating macro-economic indicators kept the market rangebound as benchmark KSE100 index closed the week on a slightly positive note at 40,150, up 73 points WoW. Volumes witnessed a decline of 8.1% with 150mn shares trade during the week. Key underperformers during the week were Autos (-5.4%), Fertilizer (-4.0%) and Refinery (-1.9%) sectors while Technology (4.7%), Textiles (3.8%) and Banks (1.6%) outperformed. The week started with political noise over elections for CM Punjab as Hamza Shahbaz was appointed the Chief Minister. However, later in the light of Supreme Court’s ruling, Parvez Elahi was declared CM Punjab.

On the economic front, macros further deteriorated as Pak Rupee depreciated ~14% against the US$, marking July the worst month in the last five decades. Moreover, current account balance recorded a deficit of US$2.3bn, up 39% YoY and 59% WoW. SBP reserves also witnessed a sharp decline of US$754mn to US$ 8.6bn. Based on deteriorating macros, S and P also revised the outlook on Pakistan’s Long-Term Rating to ‘Negative’ from ‘Stable’. On the news front, electricity base tariff was revised upwards by Rs7.91/unit. Moreover, Indus Motors halted its production due to delay in imports of CKDs.