The KSE-100 index fell 0.6 percent in the week ended 10 October, losing 1,066 points to close at 167,089, as geopolitical tensions, high oil prices and rising bond yields outweighed optimism over Pakistan’s staff-level agreement with the IMF.
What Pulled the KSE-100 Index Down
Banks were the biggest drag on the market, shedding 566 points, followed by fertiliser with 234, automobiles with 97, cement with 75 and textiles with 43. Three large banks together cost the index 388 points. Pakistan State Oil was the biggest positive contributor with 113 points, while oil marketing companies added 110 points overall.
Average daily trading volume fell 18.6 percent to 427 million shares. The market trades at 7.5 times earnings with a dividend yield of 6.7 percent.
IMF Agreement and Oil Prices
The staff-level agreement covers the fourth review of the Extended Fund Facility and the third review of the Resilience and Sustainability Facility. It paves the way for about $1.2 billion in disbursements, subject to approval by the IMF Executive Board, taking the total under both programmes to about $5.7 billion.
Brent crude stayed above $100 a barrel, and investors remain concerned about the trade deficit, inflation and the interest rate outlook.
Bond Auction and Reserves
In a Pakistan Investment Bonds auction, the government raised Rs381 billion against a target of Rs350 billion. Yields rose by 26 to 41 basis points on three-, five- and 10-year bonds, which raised expectations of a possible policy rate hike, while bids for 15-year bonds were rejected.
State Bank reserves rose by $15 million to $21.5 billion as of 2 October, and the rupee closed marginally stronger at Rs277 per dollar. Analysts said easing inflation and any de-escalation in the Middle East could lower oil prices and support monetary easing.
