Wednesday 28 August 2024, KARACHI: The Pakistan Stock Exchange (PSX) had a mixed performance today, reflecting investor uncertainty and market fluctuations. The day began with a negative trend, continuing from the previous session, but saw a brief surge in the middle of the day. However, by the end of trading, the market closed with a modest loss of 91 points compared to yesterday's close.
Market Overview:
The KSE 100 index started the day with bearish sentiment, reflecting investor concerns and a cautious approach to trading. The market initially struggled but later gained some positive momentum, reaching an intraday high of 78,335 points—a 250-point increase. This temporary uptick was driven by positive movements in a few key stocks, according to Topline Securities.
Despite this, the market could not sustain its gains and closed at 77,993 points, marking a decline of 91 points or 0.12% from the previous day’s close. Several prominent stocks, including BAHL, HINOON, PKGS, MCB, and HUBC, contributed negatively to the index, collectively dragging it down by 104 points.
Gainers and Losers:
On the flip side, stocks such as MARI, ENGRO, and FFC attracted buying interest, collectively adding 162 points to the index. Their performance offered some relief amidst the overall downtrend, indicating selective investor confidence in these sectors.
Trading Activity:
The total trading volume at the bourse reached over 636 million shares, with a total value of Rs16.2 billion. KOSM led the volume chart, with more than 124 million shares traded, highlighting its active participation in the day’s market activity.
Positive Economic Indicators:
In a notable development, Moody’s Investors Service upgraded Pakistan’s long-term issuer rating from “Caa3” to “Caa2” with a stable outlook. This follows a similar upgrade by Fitch Ratings in July, where Pakistan’s credit rating was raised from “CCC” to “CCC+”.
Moody’s stated that the upgrade reflects improvements in Pakistan’s macroeconomic conditions and slightly better government external positions, though still from very weak levels. The upgrade also applied to Pakistan’s senior unsecured MTN programme, which moved from (P)Caa3 to (P)Caa2, with the outlook for the Government of Pakistan shifting to positive from stable.
Implications for Investors:
The upgrade by Moody’s is a positive signal for investors, suggesting a reduced default risk for Pakistan, consistent with a Caa2 rating. It also reflects the country’s improved ability to manage external debt and financing needs, which could bolster investor confidence in the medium term.
Earlier, Fitch’s upgrade of Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC’ was based on the expectation of continued availability of external funding, particularly in light of Pakistan’s staff-level agreement (SLA) with the International Monetary Fund (IMF) for a new 37-month USD 7 billion Extended Fund Facility (EFF).
Conclusion:
While the PSX experienced a lacklustre trading day with a slight decline, the broader economic indicators, particularly the credit rating upgrades by Moody’s and Fitch, offer a silver lining. These upgrades could pave the way for improved investor sentiment and potentially more stable market performance in the coming weeks. However, the market remains volatile, and investors are advised to stay cautious and informed.
Disclaimer: This blog is intended for financial education purposes only. Please consult with a financial advisor before making any investment decisions.
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