PSX benchmark index declines 3.7%WoW

Pakistan Stock Exchange (PSX) witnessed volatility throughout the week, with the benchmark KSE-100 index posting a weekly loss of 4,339 points or 3.7%WoW to close at 113,247 points on Friday, January 10, 2025.

The volatility was led by profit taking and portfolio adjustments at year-start. Major contributing sectors to the decline in the index were Commercial Banks, Oil & Gas Marketing Companies, Technology & Communication.

T-Bills yields in the recent auction declined marginally to 11.8% for the 3 to 12 months paper, implying further potential rate cut in the upcoming Monetary Policy Committee (MPC) meeting, scheduled for January 27.

Statement by the Prime Minister hinting at more room for reduction in policy rate, boosted investors’ optimism.

On the macroeconomic front, worker’s remittances for December 2024 were reported at US$3.08 billion, taking 1HFY25 remittances balance to US$17.8 billion.

Foreign exchange reserves held by State Bank of Pakistan (SBP) decreased by US$15 million to US$11.7 billion as of January 03, 2025.

Market participation decreased significantly, with average daily traded volume declining by 25.1%WoW to 781 million shares, from one billion shares traded a week ago.

On the currency front, PKR remained stable against the greenback throughout the week.

Other major news flow during the week included: 1) UAE rolls over US$2 billion loan, 2) Shehbaz stresses need to honor IMF commitments, 3) GoP aims to cut power tariff by up to PKR12 per unit and 4) Pakistan poised to get US$20 billion World Bank loan.

Inv. Bank/ Inv. Cos/ Securities Cos., Sugar & Allied Products and Real Estate were amongst the top performers, while Jute, Leasing Companies, Refinery, Oil & Gas Marketing companies and Paper & Board were amongst the worst performers.

Major net selling was recorded by Banks with a net sell of US$6.2 million, Companies absorbed most of the selling with a net buy of US$10.0 million.

Top performing scrips of the week were: JDWS, MUREB, PKGP, SCBPL, and LCI, while the laggards included: PSX, PGLC, NRL, SNGP, and PKGS.

According to AKD Securities, PSX is expected to remain on its positive trajectory, driven by an anticipated shift of funds from fixed income securities to equities amid falling fixed income yields.

With easing inflation, the upcoming MPC meeting will remain a key focus.

Over the medium term, the KSE-100 is anticipated to sustain its upward momentum through CY25, primarily driven by the strong profitability of fertilizer companies, higher sustainable ROEs of banks and improving cash flows of E&Ps and OMCs, benefitting from falling interest rates.