Karachi stocks ended modestly higher on Thursday as investors awaited statements from Pakistani and International Monetary Fund officials expected later in the day.
Pakistani officials are holding crisis talks in Washington with the IMF focusing on massive flooding which started in July. The IMF has predicted the catastrophe would have a “major and lasting” economic impact.
The IMF and Pakistan will release a statement at 1415 GMT on Thursday about the talks.
The Karachi Stock Exchange (KSE) benchmark 100-share index ended up 0.28 percent at 9,762.89, on turnover of 43.82 million shares.
The index has slumped more than 7 percent since late July, but is still up about 4 percent in the year to date.
“There was some buying at lower levels on hopes that the outcome of IMF and Pakistan’s meeting, given the devastating floods, would be in Pakistan’s favour but most investors remained cautious,” said Shuja Rizvi, head of sales at Crosby Securities.
Dealers noted the economic costs of the floods were still being assessed.
Pakistan’s budget deficit is expected to climb to 6-7 percent of gross domestic product in the fiscal year 2010/11 as a result of floods, Prime Minister Yousuf Raza Gilani said on Wednesday.
The target for budget deficit for fiscal year 2010/11 is 4 percent of GDP.
Prime Minister Yousuf Raza Gilani has estimated widespread devastation to crops and infrastructure could push losses to $43 billion, almost one quarter of last year’s gross domestic product.
In the currency markets, the rupee ended firmer at 85.55/60 to the dollar, compared with Wednesday’s close of 85.59/64, and dealers said the rupee would be range-bound in the short-term but expected pressure in the medium-term.
The rupee fell to a record low of 85.80 on July 12 amid a high demand for dollars from importers, as well as on debt repayments.
In the money market, overnight rates ended lower at 10 percent, compared with Wednesday’s close of between 11 percent and 11.50 percent, amid increased liquidity in the interbank market.
Dealers said there were scheduled outflows of 93.5 billion rupees ($1.09 billion) on Friday.