The week started on a positive note, buoyed by initiation of
talks for up to US$1.5 billion climate financing from IMF, government proposals
for energy tariff cuts and resolving circular debt, and strong corporate
results, particularly from banking and cement sector.
However, the momentum faded during the latter half of the
week due to absence of fresh triggers.
On the climate financing front, authorities are discussing
the implementation of carbon levy, meanwhile, IMF has objected the exemption of
sales tax on local EV component sales.
On the macro front, Pakistan signed several accords and
committed to boosting bilateral trade with Azerbaijan and Uzbekistan during the
Prime Minister's visits to respective countries and signed agreements with UAE
during the visit of Abu Dhabi’s Crown Prince.
Inflation is expected to ease further to a nine-year low of
1.9%YoY in February 2025, driven primarily by falling food and energy tariffs.
On the external front, foreign exchange reserves held by
State Bank of Pakistan (SBP) rose by US$21 million to US$11.2 billion.
Domestic currency depreciated by 0.04%WoW to close at PKR279.67/US$.
Market participation also remained subdued during the week,
with average daily traded volume falling by 17%WoW to 492 million shares, from
593 million shares a week ago.
Other major news flow during the week included: 1) GoP
collected PKR23 billion from 16 banks against windfall tax, 2) Pakistan,
Vietnam set US$3 billion annual trade target, 3) SBP invites bids for PKR200 billion
PFL buyback auction, 4) Pakistan, Iran agree to boost bilateral trade to US$10 billion,
and 5) Petroleum Division proposes PKR392.5 billion PSDP for in-house projects.
Glass & Ceramics, Real Estate Investment Trust, and
Commercial Banks were amongst the top performing sectors, while Jute, Property,
& Leasing Companies were the laggards.
Major selling was recorded by Individuals and Foreigners
with an aggregate net sell of US$24.5 million. Mutual Funds absorbed most of
the selling with a net buy of US$31.6 million.
Top selling scrips of the week were: TGL, PKGP, MLCF, NATF,
and AGP, while laggards included: MEHT, NCPL, BIPL, SEARL, and AKBL.
According to AKD Securities, market outlook remains
positive, with upcoming meeting of Monetary Policy Committee (MPC) meeting
scheduled for March 10, 2025, and any developments on IMF review remaining in
the investor’s focus.
Over the medium term, the KSE-100 is anticipated to remain
on upward trajectory, primarily driven by strong earnings in Fertilizers,
sustained ROEs in Banks, and improving cash flows of E&Ps and OMCs,
benefiting from falling interest rates and economic stability.
Top picks includes, OGDC, PPL, MEBL, MCB, HBL, FFC, ENGROH, PSO, LUCK, FCCL, ILP, INDU, and SYS.
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