KARACHI: Stocks fluctuated significantly during the outgoing week. However, the market found positive momentum in the last two sessions. It is expected that the market will sustain this positive momentum next week, amid expectations of a decline in inflation.
“We anticipate the market to sustain its positive momentum in the coming week, driven by expectations of further decline in inflation,” stated a research report of brokerage Arif Habib Ltd. “We project January 25 inflation to clock-in below 3.0 per cent. Moreover, many financial results will be announced in the upcoming week, due to which certain scrips are expected to be in the light.”
The market remained negative initially during the week, with the index declining to a low of 111,487 points, driven by factors such as the rollover week, company results falling short of expectations and worries over the cautious SBP policy rate cut. However, the market recovered in the latter part of the week and closed at 114,256 points.
The KSE-100 index closed at 114,256 points, reflecting a loss of 625 points, or a decline of 0.54 per cent, on a week-on-week basis. Average volumes arrived at 498 million shares (down 28.8 per cent WoW), while the average value traded settled at $98.5 million (down 20.6 per cent WoW).
Foreigner selling was witnessed during this week clocked in at $4.1 million (4-days) compared to a net buy of $5.6 million last week. Major selling was witnessed in FMCG ($3.9 million) followed by fertilizers ($0.7 million). On the local front, buying was reported by companies ($6.2 million) and individuals ($4.2 million).
Sector-wise negative contributions came from fertilizers (477 points), OMCs (208 points), pharmaceuticals (85 points), engineering (62 points) and E&Ps (60 points). Scrip-wise negative contributors were FFC (458 points), OGDC (124 points), PSO (110 points), BAFL (89 points) and HUBC (70 points).
The sectors that contributed positively were commercial banks (612 points), cement (82 points), automobile assembler (75 points), miscellaneous (28 points), and automobile parts & accessories (9 points). Scrip-wise positive contributions came from UBL (339 points), BAHL (248 points), LUCK (204 points), NBP (125 points) and SYS (70 points).
Analyst Nabeel Haroon at Topline Securities said that the market also closed the month on a negative note, where the KSE-100 index declined by 0.76 per cent month-on-month. “This decline can be attributed to profit taking by local and foreign institutions during the outgoing month.”
Average daily traded volume and value during the month stood at 679 million shares and Rs33 billion respectively.
Abdul Basit, an analyst at JS Research, said the KSE-100 experienced mixed trends during the week. The week commenced with the monetary policy committee’s announcement of a 100 bps reduction in the policy rate, taking the cumulative reduction to 1,000 bps since June-2024 amid an ongoing disinflation trend.
Pakistan has also significantly improved its external financing position, as highlighted by the governor of the SBP, having repaid $6.4 billion during FY25, with a remaining balance of $3.6 billion due by June-2025.
In other news, a high-level US business delegation visited Pakistan to strengthen trade and bilateral relations, the first visit since the Trump administration took office. Additionally, the IMF mission is likely to arrive by late February or early March for the first review of the $7 billion Extended Fund Facility (EFF).
During the week, Ogra notified a hike of Rs500/MMBtu in gas price for captive plants wef February 2025 instead of discontinuing their supplies, which was one of the IMF’s requirements.
As per the SBP statistics, credit to the private sector reported a significant growth of 815 percent YoY, reaching Rs1.4 trillion as of January 17, 2025. Moreover, SBP reserves fell $76 million during the week, clocking in at $11.37 billion. The PKR depreciated slightly by 0.08 per cent, concluding the week at 278.97 against the USD.
