KARACHI: The stock market remained volatile due to rising political and economic uncertainty. However, based on last session`s bullish performance, it closed the outgoing week in the green zone, driven by continuous slowing Consumer Price Index-based (CPI) inflation.

Arif Habib Ltd (AHL) said the week commenced positively with Monday`s Monetary Policy Committee (MPC) meeting. The State Bank of Pakistan (SBP) announced a policy rate cut of 100bps, bringing the interest rate down to 19.5 per cent. In a further boost to market sentiment, Fitch Ratings upgraded Pakistan`s credit rating from CCC to CCC+ on the back of an improved external funding outlook.

Moreover, the CPI for July stood at 11.1pc, slowing to a 33-month low. However, Pakistan`s trade deficit in July increased by 19.7pc year-on-year to $1.95 billion.

Meanwhile, the government raised $141bn through the auction of Pakistan Investment Bonds (PIBs), with three-year and five-year yields declining by 36bps and 15bps, respectively.

Additionally, the SBP reserves increased by $75m to $9.1bn week-on-week, but the source of this inflow was not disclosed. The rupee remained stable against the dollar at Rs278.5.

As a result, the benchmark KSE 100 index managed a meagre gain of 196 points, or 0.3pc, to settle at 78,226 points week-on-week.

Sector-wise positive contributions came from fertiliser (417 points), refinery (68 points), power (63 points), exploration and production (58 points) and pharmaceuticals (36 points).

Foreigner selling was observed during the outgoing week, clocking in at $2.2m compared to a net buy of $4.6m last week. The average volume rose 5.7pc to 356m shares while the average traded value increased 8.4pc to $60.9m week-on-week.

Other important developments in the outgoing week included the reduction of petrol and diesel prices for the Aug 1-15 fortnight and the prime minister`s call to devise a plan to attract foreign investment. Amid growing public and business community protests on staggering capacity payments to independent power producers, the National Electric Power Regulatory Authority observed that contracts could not be revisited or opened forcefully.

According to AH L, the market to maintain its positive trajectory in the future as progress on reprofiling existing debt and securing new funding commitments from Saudi Arabia, UAE and China, which are crucial for the approval of the IMF`s new programme, would set the market direction in the next week.