Today, the KSE100 Index lost 592 points and closed at 71,103. Yesterday, it had lost more than 1000 points. Today, initially, the index had risen more than 400 points, but it later entered negative territory and ended the day, breaking the intra-day level of 72k.
After making a net buy of a huge amount of over $3.5 million yesterday, the ‘Individuals’ today were in a selling mood and made a net sale of $2.8 million as the KSE100 lost 590 points. This is the biggest net sale in the local investor category. The other biggest seller category was ’other organization’ ( i.e., not fitting in any category).
The activity of ‘Individuals’ is without a pattern at PSX, and their stance is generally opportunistic.
Encouragingly, mutual funds were net buyers today, though for a small amount.
The ‘Foreign Corporate’ made a good amount of net buying of $2.64 million. Even overseas Pakistanis were net buyers today.
Yesterday evening, after the market closed, the Monetary Policy Committee of the Pakistan Central Bank made an announcement after their scheduled meeting to hold the policy rate unchanged at 22%. This was the seventh meeting in which the central bank saw no reason to change the policy rates. The policy rate was elevated to this level in June last year. In anticipation of this, the Pakistan Stock Exchanges remained in the red yesterday, and the KSE100 Index had lost more than 1000 points.
On the other hand, the IMF also made an announcement yesterday of its approval of the second and final review of the standby arrangement for Pakistan. On this, the PSX had started the day in a positive mood, forgetting the pointing out of persistent structural economic issues, both by the central bank and the IMF.
Recall that the current PSX rally is all about 'foreign corporates re-entry into the Pakistan market after the IMF deal last year. Their cumulative net buying into the PSX last year and year to date is just around $125 million. Compare that to their cumulative net selling since 2017 of close to $2 billion.
The Pakistan stock market is small, and recent buybacks when stocks became dirt cheap on book value have also reduced the free float further. I doubt if our market is ready to face the full onslaught of foreign buying.
