Stocks to stay upbeat as PM Sharif gears up for fresh IMF loan

KARACHI: Stocks are expected to remain positive in the next week, as investors await the announcement of the new cabinet and a resumption of fresh talks on a new bailout loan with the International Monetary Fund, analysts said.

“The ongoing developments on the political front and the initiation of talks with the IMF after the formation of the cabinet are anticipated to keep the market momentum positive in the upcoming week,” stated brokerage Arif Habib Ltd. “Moreover, the resumption of restructuring of SOEs and matters related to privatization will be a key area of interest for the investors.”

The bullish momentum continued at the index on the opening bell this week, amid the revival of the investors' confidence on the back of the formation of the new federal government.

Overall, the market closed at 65,794 points, climbing up by 468 points or 0.7 percent week-on-week. Average volumes arrived at 425 million shares (up by 1.60 percent week-on-week ) while the average value traded settled at $59 million (up 6.4 percent week-on-week ).

Foreign buying continued during this week, clocking in at $6.3 million compared to a net buy of $10.4 million last week. Major buying was witnessed in commercial banks ($7.9 million) and fertilizer ($0.5 million). On the local front, selling was reported by companies ($6.8 million) followed by insurance companies ($0.7 million).

Sector-wise positive contributions came from oil & gas exploration (217 points), refinery (105 points), fertilizer (76 points), power generation & distribution (61 points) and cement (61 points). Scrip-wise positive contributors were DAWH (175 points), OGDC (164 points), PPL (89 points), HUBC (62 points) and NRL (46 points).

The sectors which mainly contributed negatively were commercial banks (210 points), chemicals (23.11 points), and tobacco (18 points). Scrip-wise negative contributions came from MEBL (93 points), FFC (65 points), HBL (47 points), BAHL (44 points), and ENGRO (42 points).

Muhammad Waqas Ghani, an analyst at JS Research, said the market reacted positively to the settling of dust on the political front after Shehbaz Sharif was elected as Prime Minister for a second time by the parliament last Sunday. "The first directive by the incoming PM was to immediately proceed with talks with the IMF regarding the EFF's last tranche."

Pakistan's international bonds also posted a rally on Monday on the back of clarity on the political front following weeks of uncertainty after a hung election.

Analyst Nabeel Haroon at Topline Securities said the market reacted positively to the directives of Shehbaz Sharif after taking charge as Prime Minister to the ministry of finance to make preparations for holding crucial talks with the IMF.

"Investors' confidence further increased on news that the IMF has stated that it is ready to send its mission to Pakistan after the formation of a new cabinet."

Other major developments during the outgoing week included Moodys’ upgradation of Pakistan’s banking sector outlook from negative to ‘stable’, T-Bill auction held during the week, in which the government raised Rs527 billion as against the target of Rs225 billion, where yields fell in the range of 3-30 bps and remittances number for February coming in at $2.25 billion (down 6 percent month-on-month while up 18 percent year-on-year in Feb-2024).

In addition to this, SBP reserves fell by $54 million week-on-week, reaching $7.9 billion. Furthermore, PKR closed at 279.04 against USD, appreciating by Rs0.15 or 0.055 percent week-on-week.