Stocks likely to continue upward momentum

KARACHI: Pakistan stocks increased during the outgoing week and this positive trajectory is likely to prevail next week as well since the fears of a mini budget have now receded.

The KSE-100 index remained bullish during the week, closing at 94,763, an increase of 1.6 per cent WoW. Average volumes increased 20 per cent WoW to 878 million shares.

During the week, a delegation from the IMF visited Pakistan to review the country’s economic performance during Q1FY25.

Muhammad Waqas Ghani, an analyst at KS Research, said positive momentum at the PSX was boosted after the Federal Board of Revenue’s (FBR) assurance to the IMF that the Rs12.9 trillion revenue target for FY25 would be upheld.

Market sentiment also strengthened following reports that there would be no mini budget or new tax measures, and that no sales tax would be levied on petroleum products.

The IMF team also engaged with the provinces regarding their contributions to tax collection due to concerns that the provinces, particularly Punjab, had not accomplished the expected revenue surplus.

On November 14, the finance ministry informed the IMF that it had updated Q1FY25 fiscal operations figures, which now showed a provincial surplus of Rs40 billion for Punjab. With these figures, all provinces now show a budget surplus for the period.

During the week, banking sector stocks gained impetus after the IHC’s decision to temporarily relieve banks from additional tax on failing to meet ADR targets. As per latest data, SBP reserves clocked in at $11.3 billion.

Analyst Nabeel Haroon at Topline Securities said the KSE-100 Index gained 1.58 per cent on a WoW basis, adding that this gain can largely be attributed to continuous buying mutual funds on reallocation of funds from other asset classes towards equity, as mutual funds have net purchased equity worth $28 million MTD as of Thursday`s close.

Apart from it, satisfaction shown by the IMF mission over the increase in the tax-to-GDP ratio by nearly 1.5 per cent have suppressed the concerns with respect to a mini budget. Besides this, stay order taken by banks on additional taxes on the lower-than-target ADR also provided confidence to investors.

Other developments during the outgoing week were: T-Bill auction during the week in which government raised Rs776 billion as against the target of Rs800 billion and maturity of Rs1,007 billion, yields largely remained stable in the auction.