Stocks likely to stay positive following approval of EFF by IMF

KARACHI: Stocks are likely to witness positive activity during the upcoming short week, as Pakistan has reached a staff-level agreement with the International Monitory Fund (IMF).

CEO of Topline Securities Mohammed Sohail said, “IMF staff has approved a much-needed long-term EFF for Pakistan. This will be the fourth EFF since 2000.

He informed that when the EFF 2001-2004 and 2013-2016 were completed, the economy showed signs of positive growth. The EFF 2019-2022 was not completed, and Pakistan suffered on the economic front. “Hope Pakistan will comply with IMF conditions in this new EFF (2024-2027) that will help in moderate economic recovery after several years of slowdown and high inflation,” he added.

Brokerage Arif Habib Limited said, “With holidays in the upcoming week, the market will be open for only three trading days, resulting in lower activity.”

The market commenced on a positive note this week, continuing the momentum from last year. Moreover, the market closed at the highest ever level of 80,672 points (touching 81,087 points in the intra-day) on Tuesday. However, the market witnessed correction on the following day, given new conditions of the IMF surfaced such as the abolishment of the Pakistan Sovereign Wealth Fund and the proposal of 45 per cent tax on agriculture income.

The KSE-100 index closed at 79,944 points, down by 269 points or 0.33 per cent week-on-week. Average volumes arrived at 439 million shares (down 0.3 per cent WoW), while the average value traded settled at $75 million (up 13.6 per cent WoW).

Foreign investment continued during this week, clocking in at $4 million compared to a net buy of $7.7 million last week. Major buying was witnessed in banks ($2.1 million) and technology ($1.7 million). On the local front, selling was reported by individuals ($2.6 million) followed by mutual funds ($2.5 million).

Sector-wise negative contributions came from E&Ps (154 points), commercial banks (136 points), auto assemblers (61 points), power (48 points), and OMCs (34 points). Scrip-wise negative contributors were MCB (102 points), HUBC (100 points), UBL (93 points), PPL (77 points), and TRG (57 points).

The sectors that mainly contributed positively were fertilizer (106 points), food & personal care products (71 points), textile composite (47 points), technology (32 points) and pharmaceuticals (17 points). Meanwhile, scrip-wise positive contributions came from HBL (143 points), NBP (104 points), FFC (82 points), SYS (73 points), and FFBL (63 points).

Shagufta Irshad, an analyst at JS Research, said the KSE-100 remained volatile throughout the week, losing 269 points or 0.3 per cent WoW following the Supreme Court ruling on the case of the reserved seats. Under which, the representation of the present government, along with its coalition partners, in the National Assembly, was reduced from 68 per cent to 62 per cent.

Nabeel Haroon at Topline Securities said the KSE-100 index declined slightly by 0.34 per cent on a WoW basis. “This decline can be attributed to profit-taking around the psychological 80,000 index level, as investors await the $6 billion EFF deal with the IMF.”

Major developments during the outgoing week were: remittance for June clocked in at $3.2 billion (up by 44 per cent YoY) and T-bill auction in which yields declined in the range of 10bps to 18bps.

The SBP reserves climbed up by $15.6 million to $9.4 billion. The rupee remained stable at 278.4 against the dollar.

Other major news: OGDC revived Kunnar-11 well, boosting daily oil output, Passenger car sales surged 138 per cent in June, down 16 per cent in FY24; SNGPL managed to push UFG losses down from 8.98 per cent to 5.15 per cent over the last four years, and UBL to sell 55 per cent stake in UNBL UK to Bestway Group.