Stocks likely to scale new heights next week

KARACHI: Stocks made new records during the outgoing week, as the KSE-100 index closed over 97,000 points. The market is now expected to keep the upward momentum amid attractive valuations.

“We expect the market to maintain positive momentum in the coming week, driven by certain scrips trading at attractive valuations, which are likely to continue enticing investor interest,” stated brokerage Arif Habib Ltd.

The market exhibited stellar performance this week, reaching a historic milestone by surpassing an all-time high of 97,798 points. Following last week’s strong rally, the positive momentum continued, supported by favourable macroeconomic indicators, strong fundamentals and robust liquidity.

The market concluded the week at 97,798 points, marking a gain of 3,034 points (3.2 per cent week-on-week). Average volumes arrived at 870 million shares (up 1.8 per cent WoW), while the average value traded settled at $109 million (down 4.8 per cent WoW).

Foreigner selling was witnessed during this week, clocking in at $32.9 million compared to a net sell of $10.6 million last week. Major selling was witnessed in banks ($21.8 million) followed by fertiliser ($7.4 million). On the local front, buying was reported by companies ($13 million) followed by mutual funds ($12.3 million).

Sector-wise, positive contributions came from commercial banks (1,475 points), fertilizer (1,386 points), chemical (83 points), pharmaceuticals (103 points) and miscellaneous (112 points). Scrip-wise positive contributors were FFC (980 points), MEBL (393 points), BAHL (254 points), HBL (207 points), and MCB (180 points).

The sectors that mainly contributed negatively included cement (151 points), refinery (54 points), and technology & communication (35 points). Scrip-wise negative contributions came from HUBC (91 points), SEARL (59 points), TRG (56 points), LUCK (52 points), and ATRL (48 points).

Muhammad Waqas Ghani, deputy head at JS Research, said that according to the data released from the State Bank of Pakistan (SBP), Pakistan recorded a noteworthy third consecutive monthly surplus of $349 million in Oct-2024, resulting in a cumulative current account surplus of $218 million for 4MFY25, compared to a deficit of $1.53 billion during the same period last year.

According to PBS data, large scale manufacturing (LSM) recorded a 1.9 per cent year-on-year decrease in September 2024, the second month of negative growth after a YoY increase in Jul-2024. The overall growth was negative, however, notable improvement continued in many pivotal sectors during September 2024. Market sentiment improved following the finance minister’s assurance that no mini-budget or new tax measures would be introduced after successful talks with the IMF team.

Banking-sector stocks gained momentum as banks continue to work toward meeting ADR targets, latest data showed a 9.0 per cent rise in the loan portfolio in October 2024, while deposits declined 3.0 per cent month-on-month.

In the PIBs auction held this week, the government raised Rs368 billion against the target of Rs300 billion whereas cut-off yields declined by 9-19 bps across tenors. As per the latest data, SBP reserves remained stable at $11.3 billion.

Analyst Nabeel Haroon at Topline Securities said the gain can be attributed to the conclusion of talks with the IMF at the end of last week, where there was no indication of a mini budget. This, per him, boosted investor sentiment. Apart from this, buying by mutual funds also provided further stimulus to the market.

The Pakistani rupee depreciated marginally by 0.10 per cent WoW, ending the week at 277.96 against the US dollar.