PSX witnesses 29%WoW decline in daily trading volume

Pakistan Stock Exchange witnessed volatility throughout the week, largely influenced by corporate earnings announcements. During the week, the benchmark KSE-100 index shed 625 points or 0.54% to close at 114,256 points on Friday, January 31, 2025.

Fertilizer stocks weighed heavily on the benchmark index, following FFC’s lower-than-expected profitability. However, this was partially offset by higher-than-expected final dividends by the banks.

The week begun with State Bank of Pakistan (SBP) cutting the policy rate by 100bps to 12% amid a continued disinflationary trend.

Additionally, SBP revised its inflation forecast for FY25 to range between 5.5% to 7.5%, significantly lower than the earlier projections of 11.5% to 13.5%.

The central bank also changed its current account balance forecast to a range of a 0.5% surplus to a 0.5% deficit of GDP in FY25 as against an earlier estimate of a nominal deficit.

Meanwhile, ahead of the IMF review, authorities met another condition by notifying a gas price increase for captive power producers to PKR3,500/ mmbtu.

Market participation dropped to 15-week low, with an average daily traded volume of 498 million shares, down 29%WoW.

Foreign exchange reserves held by SBP declined by US$76 million to US$11.4 billion as of January 24, 2025.

The domestic currency weakened marginally against the greenback to PKR278.95 to a US$.

Major news flow during the week included: 1) Reko Diq deal with Saudi firm nearing finalization, 2) Only 3,651 individuals file taxable income greater than PKR100 million, 3) SBP injects PKR523.7 billion through open market operations, and 4) Weekly SPI inflation eases multi-year low at 0.44%YoY.

Textile Weaving, Automobile Assembler, and Banks were amongst the top performers, while OMCs, Engineering, and Refinery sectors were among the laggards.

Major selling was recorded by Banks and Foreigners with a net sell of US$10.4 million. Companies, Other organizations and Individuals absorbed most of the selling with a net buy of US$10.5 million.

Top performers of the week were: ATLH, NBP, KTML, AKBL, and BAHL, while the laggards included: ISL, SNGP, UNITY, AGP, and KOSM. 

According to AKD Securities, the market is expected to remain positive, with short-term market momentum largely following the upcoming corporate results.

Over the medium term, the KSE-100 index 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.