KARACHI: The Pakistan stock market is expected to maintain its positive momentum in the upcoming week, analysts said.
The market concluded the week on a positive note, supported by improved domestic liquidity and favourable investor sentiment surrounding discussions on the IMF’s visit for the first review under the $7 billion EFF.
“We anticipate the market will sustain its positive momentum next week, with the monetary policy meeting scheduled for Monday,” Arif Habib Limited stated in its weekly review note
The brokerage house expects the Monetary Policy Committee (MPC) to cut the policy rate by 50 basis points (bps) to 11.5 per cent. Additionally, the ongoing IMF mission and the first review of the bailout programme are expected to further bolster investor confidence.
On the economic front, inflation in February 2025 dropped to a 113-month low of 1.5 per cent year-on-year (YoY), the lowest since September 2015 (1.3 per cent).
Meanwhile, a Treasury bill (T-bill) auction was held during the week, with yields on three-month bills remaining unchanged, while six-month and twelve-month papers saw a decline of one basis point each. In the first eight months of the fiscal year, the trade deficit widened by 6.3 per cent YoY to $15.8 billion.
On a positive note, oil marketing company (OMC) sales grew by 4.0 per cent YoY during the same period. However, urea and diammonium phosphate (DAP) sales declined by 37 per cent and 64 per cent YoY, respectively.
Furthermore, the State Bank of Pakistan’s (SBP) foreign exchange reserves increased by $27 million week-on-week (WoW), reaching $11.2 billion, while the rupee depreciated slightly by 0.05 per cent, closing at 279.82 against the US dollar. The KSE-100 index closed at 114,399 points, reflecting a weekly gain of 1,147 points, or 1.01 per cent.
Sector-wise positive contributions came from: E&Ps (656 points); cement (451 points); OMCs (346 points); power (177 points); and glass (114 points). Meanwhile, the sectors that contributed negatively were: technology & communication (122 points); textile (97 points); autos (89 points); and commercial banks (48 points). Scrip-wise positive contributors were PPL (290 points); PSO (247 points); OGDC (236 points); HUBC (185 points); and FCCL (156 points). Whereas, scrip-wise negative contributions came from SYS (84 points), MTL (77 points), MEHT (75 points), BAHL (74 points), and UBL (64 points).
Foreigner selling continued during this week clocked in at $5.3 million compared to a net sell of $6 million last week. Major selling was witnessed in E&P ($2.7 million) followed by commercial banks ($2.3 million). On the local front, buying was reported by banks/DFIs ($43.4 million) and companies ($7.5 million). Average volumes arrived at 291 million shares (down by 41 per cent WoW), while the average value traded settled at $65 million (down by 24.2 per cent WoW).
Other major news during the week included: fuel prices cut by up to Rs5.3 per litre; July-February exports up 8.17 per cent to $22.022 billion YoY; new customs values fixed for LCD screens imported from China/Hong Kong; Richards Bay Coal price drops to $90.3, near a three-year low; and the Strategic Investment Facilitation Council (SIFC) Executive Committee agrees to leverage PIBTL for copper and gold handling.
Waqas Ghani, Head of JS Equity Research, noted that the KSE-100 remained positive throughout the week, closing at 114,399 points, with a 1.0 per cent WoW gain. However, trading volumes declined 41 per cent WoW to 291 million shares.
He added that the week began on a negative note, with investors remaining cautious as the IMF team reviewed Pakistan’s progress under the EFF.
Ghani further pointed out that Pakistan’s tax collection fell short by Rs606 billion against the target of Rs7.95 trillion for the first eight months of the fiscal year. However, positive developments throughout the week ultimately lifted market sentiment.
Consumer Price Index (CPI) inflation for February 2025 stood at 1.5 per cent, marking the lowest reading in nearly a decade. This kept real interest rates (RIR) above 10 percentage points.
The government reached an agreement with commercial banks to borrow Rs1.25 trillion at a rate 1.0 per cent below the prevailing Karachi Interbank Offered Rate (KIBOR). This is seen as a major breakthrough for Pakistan’s energy sector, as it could unlock significant cash flows for companies affected by circular debt.
Moreover, Ghani stated that the government has proposed tax reductions to the IMF for key sectors, including real estate, tobacco and beverages.
