Karachi, June 17, 2022 (PPI-OT): Market attempts to recoup losses

Pakistan equities started the week with a sharp decline after news surfaced of a possible revision in budget proposals to address some reservations of the IMF. The market however showed a recovery trend throughout the rest of the week as government took measures to address key IMF concerns regarding revisions in income tax slabs and increased POL prices. The recovery led the index to close at 42,141, +0.3% WoW. Banks remained underperformers during the week as the proposed budget imposed several taxes on the sector whereas OMCs came out as the top performer as a result of removal of PDC on petroleum products.

On the news front, cut off yields for the 6 month and 12-month papers showed a decrease of 30-55bp as compared to previous cut-offs during the T-Bill auction held this week. On the external front, SBP reserves stooped low to US$8.9bn, dropping by US$234mn WoW while rupee devaluation also continued during the week with the PKR/USD closing at 208.75 on Friday. Import breakup, as per PBS data, showed that crude oil imports during 10MFY22 increased by 75% YoY. On the other hand, as per latest LSM numbers, the overall output showed a growth of 10.7% YoY during 10MFY22.