Karachi: The KSE-100 index observed a slight uptick this week, gaining 410 points or 0.5%, closing at 78,898 points on Friday, as investors navigated a range of financial events and macroeconomic developments. The market’s movement was largely influenced by corporate results, along with expectations from the IMF’s pending executive board approval and the impending FTSE rebalancing set for September 23, 2024.

According to AKD Securities Limited, on the macro front, the government has been actively exploring options to bridge the external financing gap, including engagements with commercial banks. The week also saw the onset of outflows associated with the FTSE rebalancing. Inflation showed a significant easing, recording a single-digit rate of 9.6% for August 2024 — the first in nearly three years. This led to a real positive interest rate of nearly 10% and a policy rate to 3-month secondary yield differential of 1.74%, setting market expectations for a possible rate cut in the upcoming Monetary Policy Committee (MPC) meeting.

Export figures for August showed a 16% annual increase, contributing to a 21% year-over-year contraction in the trade deficit to US$1.68 billion. Declining international oil prices, with WTI falling below the US$70 per barrel mark, are expected to reduce oil import bills and support further inflation control. However, fiscal concerns persist as the Federal Board of Revenue (FBR) missed its tax collection target for August 2024, suggesting that a mini-budget might be on the horizon if this shortfall continues. Moreover, the Finance Minister indicated a potential further cut in the revised Federal PSDP budget, now at PKR 1.1 trillion, due to ongoing fiscal constraints.

Market participation declined by 18% week-over-week, with average daily traded volume dropping to 493 million shares from 600 million shares the previous week. The Pakistani Rupee remained largely stable against the US dollar, closing the week at 278.6. Additional key developments included a 14% drop in the sales of POL products in August, a rise in government debt stocks to PKR 69.9 trillion, nearing completion of a Saudi deal on Reko Diq, and a significant 60% slump in cotton arrivals as of August 31, 2024.

Sector performance varied, with Jute, Cable and Electrical Goods, and RIETs sectors leading gains, while Woolen, Textile Spinning, and Textile Weaving sectors experienced the sharpest declines. Foreign investors recorded a net sell of US$6.7 million, whereas individual investors were the predominant buyers, net purchasing US$5.7 million worth of stocks.