Pakistan Stock Exchange index up 2.58%WoW

Pakistan Stock Exchange maintained its bullish momentum during the week ended on April 26, 2024. Despite some profit-takings, challenged its previous highs and closed the week at its highest ever level of 72,742 points, marking a weekly gain of 1,833 points or 2.58%.

Overall, the positive momentum was largely driven by anticipation of investments from Saudi Arabia, the successful visit of Iran’s President, and inclusion of Pakistan in the IMF’s executive board agenda.

On the macroeconomic front, trends remained encouraging. Firstly, current account balance for March 2024 clocked in at a surplus of US$619 million, taking 9MFY24 total CAD to US$508 million, down by 87%YoY.

Foreign direct investment in March witnessed an increase of 89%MoM, reaching US$258 million.

Inflation is expected to ease; with April 2024 CPI estimated at 16.9%YoY compared to increase of 36.4%YoY during the same period last year. This easing inflationary pressure signaled monetary easing to investors, which resulted decline in secondary market yields, with the yield on 12-month paper decreasing to 20.21%. The weekly inflation index, SPI has been on a downward trajectory for the past two weeks, indicating a favorable outlook for inflation for next month as well.

Consequently, the possibility of monetary easing beginning in the upcoming monetary policy meeting scheduled for Monday cannot be ruled out.

On the flip side, concerns regarding smuggling have begun to emerge, particularly in the petroleum sector, which is beginning to impact the refinery sector.

With the market enjoying positivity, participation also improved WoW with average daily traded volume increasing to 650 million shares as compared to 492 million shares in the earlier week, up 32%WoW.

Foreign exchange reserves held by State Bank of Pakistan declined by US$74 million to US$7.98 billion as at April 19, 2024. PKR depreciated by 0.03%WoW to close at 278.4/US$.

Other major news flows during the week included: 1) Pakistan's IT exports were up 37% to record US$306 million in March, 2) RDA inflows rose to US$7.66 billion, and 3) GDP expected to grow 2.6% during FY24.

Top performing sector were: Fertilizers, Synthetic & Rayon, and ETFs, while Tobacco, Miscellaneous, and Refinery were amongst the worst performers.

Flow wise, major net selling was recorded by Insurance companies with a net sell of US$13.1 million. Mutual Funds absorbed most of the selling with a net buy of US$6.0 million.

Top performing scrips of the week were: FATIMA, DGKC, AVN, EFERT, and FFBL, while laggards included: FHAM, PAKT, PSEL, BIPL, and NRL.

Looking ahead, the upcoming monetary policy meeting scheduled for April 29, would remain in the limelight, with start of monetary easing poised to further support the ongoing bullish trend of the market, that would be led by debt-heavy sectors.

Additionally, the disbursement of the third tranche of the IMF’s SBA and initiation of talks with IMF for next EFF will be closely monitored.

Given the market at its highest, analysts advise investors to focus on fundamentally strong companies.