KARACHI: The Pakistan stocks gained 1.2 per cent during the week ended December 17, 2021, and analysts expect the market to move both ways next week.
Further, a mini-budget is expected soon, where the market will react to any introduction, re-imposition or removal of duties and subsidies.
“There is a likelihood that [the] inflationary pressures will start paring once the commodity prices lose more steam from tightening by global central banks,” Wajid Rizvi at JS Global Capital said.
“We believe further tightening in Pakistan will be slower than previously anticipated leaving January 2022 with a status quo stance. We expect [the] policy rate to peak at 10.75 per cent during CY22 where shifts in [the] policy stance will be at a sedated pace, compared with recent actions.”
The Pakistan Stock Exchange KSE-100 shares Index gained 1.23 per cent, or 504.9 points, to close at 43,900.68 points.
Recovery in participation came in with average daily trading volumes increasing by 30 per cent to 265.02 million shares. The average value of traded securities for the outgoing week increased 12.8 per cent to $47.05 million.
The week started with dismal performance, as the market awaited clarity regarding the monetary policy action. The central bank on Tuesday increased the policy rate by 100bps to 9.75 per cent, as opposed to 175bps room implied by the secondary market yields, which also indicated that the policy settings will remain broadly unchanged in the near-term.
The market reacted positively to the news and cyclical sectors got in the limelight, especially after the central bank’s indication of no policy move in January 2022.
Nonetheless, concerns over macroeconomic indicators, continuous rupee depreciation, and immune behaviour of cutoffs in T-bills auction mid-week tempted the investors to book gains the next day.
The market regained some confidence on the last trading day when yields in the secondary market dropped in reaction to the SBP’s announcement of liquidity injection.
Cements, up 5.8 per cent and engineering, up 9 per cent were among the key performers this week.
On the news front, the government reduced the rates for petrol and diesel by Rs5/litre, adjusting for the decline in the global oil prices. Moreover, the Cabinet Committee on Energy (CCoE) approved a gas load management plan under which gas to the compressed natural gas (CNG) sector will remain suspended until the middle of February 2022, while non-export sectors will be provided gas every alternative week.
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