Stock market at a glance.

Market Review

Border tensions between Pakistan and India remained on the forefront during the week resulting in a volatility for the benchmark index. The market recovered slightly on the last day of the week as Pakistan agreed to release the Indian pilot to de-escalate tensions. The benchmark index closed at 39,539pts, down 1.2%WoW. Market participation increased as evident from decrease in ADT and ADTV by 51.9%WoW and 33.1%WoW, respectively. Foreign investors were net sellers, exhibiting an outflow of USD1.3mn. During the week, the government increased the prices of petroleum products, where prices of petrol and HSD were increased by PKR2.5/litre and PKR4.75/litre, respectively.

Additionally, SBP launched three Shariah Compliant Refinance Schemes for investments in the renewable energy and agri-related projects to provide level playing field to Islamic banking system. Furthermore, Cargill, the US-based company with global outreach is expanding its footprint in Pakistan by diversifying operations mainly into port infrastructure. Also, Matiari-Lahore HVDC transmission line project achieved financial close and will be fully operational by Mar'21. On the macro front, foreign exchange reserves held by SBP declined marginally by USD6.0mn to USD6.8bn.

Additionally, the government acknowledged that the GDP growth target would be missed by 2% as a result of stabilization efforts. Furthermore, according to Fitch Solutions, Pakistan and IMF will soon reach a bailout deal with a potential size of USD12bn but the country is expected to have an increasing pressure to improve fiscal consolidation through austerity measures. During 8MFY19, FBR missed the revenue collection target by PKR235bn as total revenue collections clocked in at PKR2.3trn. Moreover, foreign assistance in 7MFY19 decreased by 60%YoY to USD2.7bn as against USD6.9bn received SPLY.

Outlook

The market would await India's response to Pakistan's peace gesture, where any negative response from India would dampen market sentiments.

News This Week

Economic highlights and data points

Reserves edge lower (Dawn): Reserves held by the State Bank of Pakistan decreased by a marginal USD6.0mn to USD8.0bn during the week ended on Feb 22. Holdings of the commercial banks were recorded at USD6.8bn while total liquid reserves of the country stood at USD14.8bn.

FBR misses collection target by PKR235bn for 8MFY19 (Dawn): The Federal Board of Revenue (FBR) missed collections target by PKR235bn during 8MFY19...