Stocks likely to stay positive amid updates on IMF programme

KARACHI: Stocks closed slightly lower during the outgoing week. The market is expected to stay positive next week amid ongoing results season and updates on the IMF programme.

“We anticipate the market to remain positive in the coming week, buoyed by the ongoing results season,” said Brokerage Arif Habib Ltd. “Investors will be monitoring IMF-related updates; we anticipate the Pakistan Bureau of Statistics (PBS) to report single-digit inflation for the month of August 24 in the upcoming week, which could re-ignite expectations of further rate cut and boost the overall sentiment.”

The market remained lacklustre throughout the week amid ongoing concerns related to Pakistan’s absence from the IMF’s upcoming executive board meeting agenda in August. However, on Wednesday, Moody’s upgraded Pakistan’s credit rating from Caa3 to Caa2, which boosted investor sentiment at the market.

The market closed at 78,488.21 points, marking a decrease of 313 points or 0.4 per cent week-on-week. Average volumes arrived at 604 million shares (up by 4.5 per cent WoW), while the average value traded settled at $67 million (up by 20.5 per cent WoW).

Foreigner buying was observed during this week, clocking in at $3.7 million compared to a net sell of $0.6 million last week. Major buying was witnessed in exploration and production ($2.1 million) and technology and communication ($1.5 million). On the local front, selling was reported by banks/DFIs ($3.9 million) followed by mutual funds ($3.3 million).

Sector-wise negative contributions came from commercial banks (-369 points), cement (-138 points), pharmaceuticals (-96 points), technology and communication (66 points) and leather and tanneries (63 points). Scrip-wise negative contributors were HBL (-162 points), BAHL (-81 points), MEBL (-80 points), UBL (-67 points), and SRVI (-63 points).

The sectors that mainly contributed positively were power generation and distribution (176 points), fertilizer (145 points), and chemical (93 points). Stock-wise positive contributions came from HUBC (175 points), NBP (136 points), MARI (128 points), COLG (96 points), and MTL (74 points).

Analyst Wadee Zaman at JS Research said the KSE-100 index experienced subdued activity during the week due to security concerns and the roll-over period, ending with modest WoW losses of 0.4 per cent, closing at 78,488 points. The market did see some recovery in the final sessions, driven by external developments, including Moody’s upgrading Pakistan’s rating to Caa2, reflecting improved macroeconomic conditions and slightly better government liquidity and external positions.

“Although Pakistan is not on the agenda in the IMF executive board meetings scheduled till September 4, we anticipate that the IMF board will approve the Extended Fund Facility (EFF) in the coming weeks,” Wadee Zamand said. “The finance minister has requested a $1.2 billion loan from Saudi Arabia to help bridge the external financing gap and secure the timely approval of EFF next month. Saudi Arabia has also offered to acquire a 15 per cent stake in the Reko Diq mining project.”

Nabeel Haroon, an analyst at Topline Securities, said the decline in the benchmark index can be attributed to the fact that Pakistan is yet not included in the IMF agenda of its executive board meetings scheduled till September 4.

Moreover, the repatriation of profit and dividend by foreign investors rose significantly by 64x to $139.13 million in July 24 against $2.16 million in SPLY.

SBP reserves were around $9.4 billion up by $112 million WoW. The Pakistani rupee appreciated against the greenback by Rs0.2 or 0.07 per cent at 278.5.