Pakistan’s Stock Market Faces Subdued Week with Downturn in Banking Sector

Karachi, The stock market in Pakistan experienced a downturn this past week, with the index dropping by 365 points, or 0.46%, influenced by a weak performance in the banking sector. This was mainly due to the continuation of the ADR-based tax, as per AKD Securities Limited, the source of the press release. Trading volumes also saw a decrease, averaging 356 million shares, a 13% drop from the previous week. The last week of the fiscal year and the occurrence of futures rollover contributed to the lackluster performance.

According to AKD Securities Limited, other significant economic indicators were also released during the week. The current account deficit (CAD) recorded was US$270 million, falling short of the expected slight positive balance, primarily because of the State Bank of Pakistan’s actions to clear the backlog of overdue outward dividend repatriations. Foreign Direct Investment (FDI) for the month was reported at US$271 million, a 95% increase year-over-year, bringing the 11-month figure for FY24 to US$1.73 billion, up by 15% from the previous year. The approved Federal budget introduced several amendments including a 15% federal excise duty on sales by builders and developers, among other fiscal adjustments.

On the external front, the country's foreign exchange reserves decreased by US$239 million, closing at US$8.9 billion. Conversely, the Pakistani rupee appreciated slightly against the US dollar, ending at PkR278.34. Additionally, the World Bank approved a US$535 million support for social protection and livestock development. In terms of market sectors, Tobacco, Jute, and Vanaspati and allied sectors were top performers, while ETFs, Refinery, and Property sectors were among the worst.

With the Federal budget now approved and clarity on fiscal policies emerging, the market anticipates a positive trend as the new fiscal year begins. The focus shifts towards upcoming discussions with the International Monetary Fund on the next Extended Fund Facility program, with expectations set on their assessment of the approved budget and its implications for economic stability.