Karachi, The stock market in Karachi witnessed slight growth this week, with the KSE100 index closing at 65,152 points, marking a 0.5% increase despite uncertainties over interest rate decisions and fiscal policy adjustments. The market's initial positive momentum was somewhat dampened by anticipation and eventual confirmation of the State Bank of Pakistan (SBP) maintaining the interest rate at 22%.
According to AKD Securities Limited, the Monetary Policy Committee's decision to hold interest rates steady was anticipated by the market and had been factored into prices. The week also saw the conclusion of discussions with the International Monetary Fund (IMF) on the second review of the Stand-By Arrangement (SBA), which culminated in a staff-level agreement, injecting optimism into the market. The talks highlighted future fiscal strategies, notably proposals to expand the tax base, including plans to tax retailers through electricity bills—an initiative shared with the IMF.
Further IMF recommendations included removing General Sales Tax (GST) exemptions on petroleum products, raising concerns about potential inflationary pressures from proposed increases in gas prices by Sui companies and the implementation of an 18% GST on petroleum, oil, and lubricants (POL) products. Despite these risks, the weekly inflation rate showed signs of easing.
Economic indicators revealed a positive current account balance for February 2024, with a surplus of $128 million, significantly narrowing the eight-month Fiscal Year 2024 current account deficit to just below $1 billion. This financial improvement contributed to a slight increase in the SBP's reserve position, which rose by $105 million week-over-week, totaling $8.0 billion as of March 15.
Market activity increased by 13% from the previous week, with average daily traded volume reaching 323 million shares. Key financial developments during the week included a $6.678 billion borrowing from various sources for July-February 2023-24, a 17.1% drop in Foreign Direct Investment (FDI) to $820.6 million, a 32% increase in IT exports to $257 million for February, and a Supreme Court order for the National Bank of Pakistan to pay Rs60 billion in pensions to retired employees.
Sector performance was mixed, with transport, investment banks/securities companies, and tobacco sectors leading gains, while synthetic and rayon, cement, and refinery sectors lagged. Notable corporate movements included significant net selling by companies and substantial net buying by insurance companies.
Top performers for the week were NBP, DAWH, PTC, CEPB, and MEBL, while NRL, PIOC, CNERGY, HCAR, and FCCL were among the biggest laggards.