Stocks likely to stay positive amid corporate earnings announcements

KARACHI: Stocks closed higher during the outgoing week amid strong corporate earnings while the market is expected to stay positive in the next week.

“We anticipate the market to maintain its positive trajectory in the coming week, buoyed by the ongoing results season,” stated brokerage Arif Habib Ltd. “The MSCI review, scheduled for next week in which it is expected that Pakistan’s weight in the FM space could increase, may further boost momentum for the KSE-100.”

Initially, the market faced pressure due to selling by investors. However, some key economic developments emerged during the week. Pakistan secured one-year debt rollover commitments from key lenders, which is a crucial step before the final approval of the $7 billion loan programme, reported the brokerage.

The market closed at 78,570 points, gaining 344 points or 0.4 per cent week-on-week. Average volumes arrived at 493 million shares (up 38 per cent WoW), while the average value traded settled at $74 million (up 21 per cent WoW).

Foreigner buying was observed during this week, clocking in at $1.4 million (4-days) compared to a net sell of $2.2 million last week. Major buying was witnessed in banks ($0.9 million) and technology ($0.6 million). On the local front, selling was reported by mutual funds ($7.1 million) followed by companies ($1.6 million).

Sector-wise positive contributions came from E&P’s (614 points), tech (84 points), OGMC (51 points), food and personal care products (22 points) and leather and tanneries (9 points). Scrip-wise positive contributors were MARI (447 points), OGDC (109 points), UBL (97 points), MEBL (77 points), and SYS (62 points).

The sectors that mainly contributed negatively were fertiliser (155 points), power generation and distribution (103 points), refinery (33 points), cement (32 points) and chemical (23 points). Stock-wise negative contributions came from FFC (236 points), BAHL (167 points), HUBC (93 points), AKBL (30 points), and COLG (26 points).

Shagufta Irshad, an analyst at JS Research, said the KSE-100 index experienced a subdued performance during the early part of this week, largely due to ongoing global uncertainties and the Bank of Japan surprisingly raising interest rates by 15bps which had a spillover effect on the KSE-100. “However, it rebounded strongly in the latter half of the week, driven by strong results in the oil and gas exploration sector, which propelled the market to a positive close with a 0.4 per cent (WoW) gain,” she said.

Analyst Nabeel Haroon at Topline Securities said the week started on a negative note; however, some recovery was observed at the end of the week, which can be attributed to MARI’s FY24 result announcement.

MARI in its FY24 result announcement posted the highest-ever profit of Rs77 billion; this result was accompanied by a final cash dividend of Rs134/share (FY24 cumulative dividend of Rs232/share) and a surprise 800 per cent bonus issue, which garnered interest in the company, and given its decent weightage in the KSE-100 index it managed to close positive on a weekly basis.

News about the anticipated divestment of profitable entities like OGDC and PPL by the government to global capable companies (GCC) further energized the sector.

Other major developments during the outgoing week were the t-Bill auction in which yields declined in the range of 50bps-54bps and remittances for July clocking in at $3 billion (vs $2.03 billion in June).

Kibor rates also fell across all tenors, with decreases ranging from 2 to 40bps DoD. SBP reserves increased by $51 million (0.6 per cent WoW), reaching $9.2 billion. The rupee depreciated against the dollars by 0.05 or 0.02 per cent to clock at 278.5.