During the week, the KSE-100 vanished 679 pts and closed at 42,592 pts as political uncertainty arises again, to the ongoing tussle between the federal and provincial governments.

Moreover, rising economic uncertainty also thrashing stock market recovery as heavy rains and flooding in the country destroyed standing crops, roads, and bridges, and cut off land routes expected to hit the economic growth and increase inflation, SBP estimates ~3% GDP growth for FY23 in which Agriculture growth is estimated at 3-4%.

Likewise, fear of an increase in inflation due to a surge in oil prices and PKR depreciation took a toll on the index whereas PKR again depreciated against the USD mainly due to i) exporters deferred their inflows due to political uncertainty and manipulation ii) the SBP allowed ECs to export USD on a consignment basis through cargo or security companies iii) lifted the ban on imports in order to meet the IMF requirement iv) continue decline in forex reserves due to external obligations as import cover reduced to below one month and v) higher oil prices lead to increasing in import bill.

On the bright side, friendly countries agreeing to lend/invest in Pakistan will improve foreign inflows, IMF upcoming tranche, and positive development on FATF is expected to support the market sentiments going forward.

Courtesy – ‘Spectrum Research’