Stocks expected to stay positive in coming week

KARACHI: Pakistan stocks closed slightly lower amid profit-taking during the outgoing week, but the market is ex-pected to stay positive in the upcoming week, as investors will be looking at developments related to the federal budget and the IMF programme.

“We expect positive momentum in the coming week, investors will monitor developments related to Federal Budget 2025,” stated brokerage Arif Habib Ltd. “Furthermore, the launch of the new programme with IMF is likely to enhance market sentiment.”

The market witnessed a mixed sentiment during the week, amid the anticipation of the upcoming FY25 federal budget and the announcement of the monetary policy rate by the SBP.

Albeit, the KSE-100 index declined by 105 points or 0.14 per cent, arriving at 75,878 points. Average volumes arrived at 447 million shares (down by 19.9 percent WoW), while the average value traded settled at $61.4 million (down by 5.2 per cent WoW).

Foreign buying was witnessed during the week, clocking in at $5.5 million compared to a net sell of $12.1 million last week. Major buying was witnessed in commercial banks ($2.7 million) and all other sectors ($1.9 million). On the local front, selling was reported by mutual funds ($8.9 million) followed by companies ($8 million).

Sector-wise negative contributions came from E&Ps (286 points), fertilizer (121 points), OMCs (89 points), refinery (28 points) and textile composite (27 points). Scrip-wise negative contributors were FFC (128 points), OGDC (117 points), BAHL (82 points), PPL (77 points), and BAFL (56 points).

The sectors that mainly contributed positively were technology (174 points), leather & tanneries (97 points), and pow-er (81 points). Meanwhile, scrip-wise positive contributions came from SYS (179 points), HUBC (108 points), SRVI (97 points), MEBL (71 points), and MTL (66 points).

Analyst at JS Research Shagufta Irshad said KSE-100 underwent correction during this week after striking positive weekly closing for the past three weeks.

She said investors preferred to book profits ahead of the FY25 budget announcement, which is now rescheduled for June 10, 2024. Tax measures expected in the budget remained in the limelight during the week. Proposals are being considered to raise GST by 1.0 per cent to 19 per cent; reduce income tax slabs for the salaried class; and increase cus-toms duty and GST on imports of non-essential products, pesticides, pharmaceutical products, food items and fuel products.

According to her, the SECP has proposed the FBR to bring capital gain tax (CGT) on immovable properties at par with CGT applicable for equity markets. The Ministry of Finance has also shared their inflation expectations of 13.5-14.5 per cent and 12.5-13.5 per cent for May and June respectively, “which is in line with our expectations.”

Despite a minor decline during the week, the market witnessed a gain of 6.72 per cent during the month. Analyst Na-beel Haroon at Topline Securities said this gain in the month could be attributed to the IMF team’s visit to Pakistan and news that talks ended on a positive note with significant progress towards reaching a staff-level agreement.

Moreover, the government raised Rs501 billion through T-bill auction and the cut-off yield across all tenors depicted a decline in the range of 29 to 60bps. In addition, the secondary market yields across all tenors also declined in the range of 1 to 44bps.

Furthermore, SBP exchange reserves were reduced by $63 million WoW to $9.09 billion. The Pakistani rupee depreci-ated by Rs 0.12 or 0.04 per cent WoW, arriving at 278.3 against the greenback.