PSX average daily volume up 23.8%WoW

Bullish momentum persisted through the first four days of the week, as the KSE-100 index reached its highest-ever closing of 80,283 points on Thursday. Overall, the benchmark index closed at 80,213 on last trading day on the week ended on July 07, 2024, with a gain of 1,767 points, up 2.25%WoW.

With an overall positive market landscape, participation also increased with the average daily traded volume rising to 440 million shares as compared to 355 million shares a week ago, up 23.8%WoW.

The finance minister confirmed positive progress in talks with the IMF, the lending authority appraising of the announced changes in electricity and gas tariffs effective July 01, 2024, with the likelihood of a staff level agreement (SLA) within this month.

On the inflation front, CPI for June 2024 was reported at 12.57%YoY, in-line with the consensus. Meanwhile, trade deficit for June was reported at US$2.39bn, taking FY24 deficit to US$24.09 billion, down by 12%YoY.

On the external front, foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$494 million on a weekly basis to US$9.39 billion.

Finally, the domestic currency slightly weakened against the greenback, ending the week at PKR278.38/US$ (down 0.01%WoW).

Pakistan’s Oil Marketing Companies (OMCs) recorded their highest sales in 19 months, reaching 1.45 million tons in June 2024. Domestic cement sales fell 4.6% to 38.18 million tons in FY24.

Other major news flows during the week included: 1) GoP decided to shut down Pakistan Steel Mills, 2) Cabinet approved PKR5.72/unit hike in Nepra base tariff, 3) Pak-Afghan rulers reestablish contact for talks and 4) Power minister promised tariff relief.

Top performing sectors were INV. Banks / INV. COS./ Securities Cos, Leasing Companies, Exchange Traded Fund, Jute and Commercial Banks, while Synthetic & Rayon, Woollen, Close-end Mutual fund, Tobacco, and Textile Composite were amongst the worst performers.

Major net selling was recorded by Mutual Funds with a net sell of US$13.65 million. Foreigners absorbed most of the selling with a net buy of US$7.69 million.

Top performing scrips of the week were: AKBL, NBP, PSX, BOP and PGLC, while laggards included: IBFL, THALL, PAKT, HGFA and FCEPL.

According to AKD Securities, market is expected to return its focus to negotiations with the IMF, to be a key market trigger in the near term.

The rally is expected to continue amidst the market's attractive valuations, with the forward P/E continuing to remain below 4.0x. At these levels, the brokerage house anticipate that sectors benefiting from monetary easing and structural reforms will remain prominent.

Its top picks include OGDC, PPL, MARI, MCB, UBL, MEBL, HUBC, FFC, LUCK, MLCF, FCCL and INDU.