Stocks poised for gains as corporate results take centre stage

KARACHI: Stocks are likely to continue a positive momentum in the coming week, fueled by the start of the earnings season and progress on state-owned enterprise (SOE) privatization, analysts said.

“In the forthcoming week, we expect the market to remain positive," brokerage Arif Habib Ltd said in a weekly market note. "The result season is expected to commence in the upcoming week, where certain scrips are anticipated to be in the limelight amid the expectation of robust results.”

In addition, any further developments related to state-owned enterprises privatization or the EFF program with the IMF will further improve market sentiment, it added.

Throughout the week, the market showcased stellar performance, taking the index level to an all-time high of 67,246 points. The robust momentum is attributable to value hunting by the investors post-stability on the economic front and ongoing progress related to the privatization of state-owned enterprises.

Overall, the market closed at 67,005 points, increasing by 1,853 points or 2.84 percent week-on-week. Average volumes arrived at 331 million shares (up by 12 percent week-on-week) while the average value traded settled at $42 million (up 7 percent week-on-week).

Foreign buying continued during this week, clocking in at $3.6 million compared to a net buy of $2.0 million last week. Major buying was witnessed in all other sectors ($1.5 million) and commercial banks ($1.4 million). On the local front, selling was reported by companies ($7.6 million) followed by banks/DFIs ($5.2 million).

Sector-wise, positive contributions came from commercial banks (638 points), fertilizer (366 points), cement (186 points), power generation & distribution (177 points), and oil & gas exploration companies (128 points). Scrip-wise positive contributors were MEBL (229 points), HUBC (180 points), ENGRO (161 points), FFC (112 points), and MCB (109 points).

Meanwhile, the sectors which contributed negatively were leather & tanneries (12 points), and transport (6 points). Scrip-wise negative contributions came from SYS (58 points), BAFL (25 points), SHEL (13 points), TRG (13 points), and SRVI (12 points).

Shagufta Irshad at JS Research said average volumes also picked up by 12 percent week-on-week in terms of shares and 7 percent in terms of value-traded, after seeing a lull in the past two weeks since the beginning of the month of Ramazan. “PIA's momentum persisted this week, surging by an additional 23 percent fueled by the accelerating privatization proceedings of the national carrier,” she said.

“The company's Board of Directors gave the green light to its unbundling and privatization efforts, signaling a significant step forward in the process. Concurrently, the new government reiterated its firm commitment to finalize the transaction by the end of June, further boosting investor confidence in PIA's future prospects.”

Besides PIA, the government also disclosed its plans to sell ODGC shares to Gulf investors. Moreover, the government clarified its plan to get the IMF's nod on PIA privatization and discuss a new 'larger and longer' fund facility in the upcoming spring session to be held in mid-April.

Analyst Nabeel Haroon at Topline Securities said the positivity can be attributed to buying by foreign corporates (net purchased as $19.37 million as of Thursday's close) and the insurance sector (net purchase of $30.83 million) following a staff level agreement with the IMF for a second and final round of 9 months SBA.

Other major developments during the week were: The SBP in the monetary policy announcement kept the policy rate unchanged at 22 percent, the current account for February posted a surplus of $128 million (vs. a deficit of $303 million in January) and the 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).

Moreover, the SBP’s reserves increased by $4 million, reaching $8.0 billion. During the week, rupee closed at 277.95 against dollar, strengthening by Rs0.19 or 0.07 percent week-on-week. In other news, the country's GDP growth rate fell to 1 percent during 2QFY24 from 2.5 percent in 1QFY24.