Stocks likely to stay positive in the coming week

KARACHI: The Pakistan stock market is likely to maintain positive momentum next week while watching developments around the IMF’s extended fund facility programme.

“The upcoming week, market participants will closely monitor the new IMF EFF programme with the IMF and any positive developments associated with it is anticipated to maintain the positive momentum,” stated brokerage Arif Habib Ltd. “Additionally, stocks are currently trading at attractive valuations, potentially attracting a greater number of investors seeking promising opportunities in the market.”

This week marked the commencement of a new fiscal year, in which the market momentum remained bullish and for the first time closed above the 80,000 points level.

The market closed at 80,213 points, increasing by 1,768 points or 2.3 per cent WoW. Average volumes arrived at 440 million shares (up 23.8 per cent WoW), while the average value traded settled at $66 million (up 31.3 per cent WoW).

Foreigner buying continued during this week, clocking in at $7.7 million compared to a net buy of $2.5 million last week. Major buying was witnessed in all other sectors ($5.4 million) and commercial banks ($2.2 million). On the local front, selling was reported by mutual funds ($13.6 million) followed by companies ($4.6 million).

Sector-wise positive contributions came from commercial banks (1,031 points), oil & gas exploration companies (175 points), fertilizer (158 points), oil & gas marketing companies (116 points), and cement (78 points). Scrip-wise positive contributors were HBL (280 points), NBP (158 points), POL (132 points), PPL (110 points), and BAHL (104 points).

Meanwhile, the sectors that mainly contributed negatively were automobiles (39 points), chemical (26 points), miscellaneous (25 points), textile composite (15 points) and tobacco (11 points). Scrip-wise negative contributions came from OGDC (50 points), Engro (42 points), THALL (39 points), IBFL (20 points), and PSEL (19 points).

Analyst Shagufta Irshad at JS Research said the KSE-100 Index hit another milestone of 80k this week. SBP reserves reached the 23-month high of $9.4 billion during the week, taking import cover to approx 2x months. This surge was attributed to substantial official inflows from multilateral agencies.

Moreover, the FBR released the tax collection figures of Rs9.3trn, missing the initial target by Rs109 billion.

Meanwhile, the government also raised petrol prices by Rs7.5 per litre and HSD prices by Rs9.5 per litre. Ogra also notified an increase in gas prices for captive power plants by 9.0 per cent, keeping tariff for other segments unchanged.

Additionally, the government also raised power tariff for domestic consumers by 51 per cent, clearing away all the obstacles to proceed with a new IMF deal. An IMF delegation is now expected to visit Pakistan in the second week of July to discuss the fresh loan.

Nabeel Haroon at Topline Securities said this gain in the market can largely be attributed to the expectation of a long-term IMF programme to the tune of $6 billion (as per news reports) after Pakistan fulfilled the global lender’s major requirements in budget FY25.

Other developments during the outgoing week were: CPI inflation for Jun 2024 clocking in at 12.6 per cent YoY as compared to 11.8 per cent in May 2024, taking full year FY24 average inflation to 23.4 per cent and trade deficit for June 2024 coming in at $2.4 billion (up by 30 per cent YoY and 15 per cent MoM).

Furthermore, the central government’s debt as of May 24 increased by 2.6 per cent MoM to Rs67.8 trillion. In addition, the Pakistani rupee depreciated by Rs0.03 or 0.01 percent WoW, arriving at 278.38 against the greenback.