Karachi, The KSE100 Index experienced a 1.2% week-on-week correction this week, following a recent peak last week, as market volumes decreased and foreign investors showed renewed interest.

According to JS Global, the downturn in the index was accompanied by a 21% drop in traded shares and an 8% decrease in the value of trades measured in U.S. dollars. Despite this correction, foreign investors were net buyers, contributing US$8 million in inflows. The market adjustment follows the central bank's decision to maintain the policy rate at 22% for the sixth consecutive time during this week’s monetary policy meeting.

Economic indicators showed mixed signals with April 2024's inflation rate dropping to a 23-month low at 17.3%, while the State Bank of Pakistan’s foreign exchange reserves remained steady at US$8 billion. Additionally, the IMF Executive Board approved a US$1.1 billion final tranche of the Standby Arrangement for Pakistan, anticipated to boost reserve levels to US$9 billion next week.

The trade deficit for April 2024 widened to a 15-month high of US$2.4 billion, driven by a 10% year-on-year increase in exports and a significant 58% surge in imports. Meanwhile, the Federal Board of Revenue reported a revenue collection shortfall for April, contributing to a fiscal year shortfall of Rs48 billion against targets.

In response to economic developments, the government reduced petrol and diesel prices, which along with a strengthening Pakistani rupee against the yen, prompted price cuts from auto assemblers to stimulate sales.