Karachi, The Karachi Stock Exchange (KSE) experienced a notable surge this week, with the benchmark index reaching an all-time high of 68,417 points, reflecting a weekly gain of 2.1%. This bullish trend was supported by a slight ease in inflation and active foreign and institutional investments.
According to AKD Securities Limited, the market's momentum gained from the inflation rate adjustment to 20.68% year-on-year for March 2024, which has led to positive real interest rates for the first time in over three years. Despite the trade deficit widening to US$2.2 billion, a 25% month-on-month increase due to a 9.2% monthly growth in exports, the market remained resilient. Anticipations of a rise in remittances around Eid are expected to bolster the current account balance. The Federal Board of Revenue (FBR) also faced challenges, missing its monthly tax collection target for the third consecutive month, although its 9-month fiscal year 2024 performance aligns with targets.
The World Bank’s projection of Pakistan's GDP growth at 1.8% for the current year and below 3% for the next two years indicates a slower economic growth pace compared to population increase. The stability in exchange rates and attractive yields have revived 'hot money' flow into the country, with substantial net inflows into treasury bills noted.
In the corporate and energy sectors, potential investments from Saudi Arabia in companies like OGDC and PPL, along with significant investment in the Reko Diq mining project, were highlighted. Additionally, the Lahore High Court's ruling favoring the deregulation of non-essential medicines positively impacted the pharmaceutical sector.
However, the market faced challenges, including reduced participation and a decline in daily traded volume. The week also saw variances in sector performances, with investment banks, pharmaceuticals, and refineries making gains, whereas transport, tobacco, and synthetic sectors faced declines. Insurance companies recorded significant net selling, while foreign entities emerged as net buyers.
Market dynamics were influenced by global factors too, as rising oil prices due to Middle Eastern tensions threaten the import bill and inflation rates.