Market participation increased as well, with average daily
traded volumes increasing by 31.4%WoW to 967 million shares, up from 736
million shares a week ago.
Market participation improved due to increase in withholding
tax (WHT) on profit/ interest from savings and fixed deposits to 20%, while it
remained unchanged at 15% for equity investments in the recently approved
Finance act, triggering a reallocation of funds, driving flows into the stock
market.
Optimism was further supported by a strong external position
amid Pakistan receiving a US$3.4 billion loan roll-over from China, in addition
to finalizing another US$1.0 billion loan from a Middle Eastern commercial bank
and US$500 million from multilateral financing.
These inflows spiked foreign exchange reserves held by State
Bank of Pakistan (SBP) to US$14.5 billion by end-June 2025. The SBP was able to
meet its goal of closing FY25 at the US$14 billion mark.
PKR remained stable against the greenback throughout the
week, closing at PKR283.97/US$.
On the macroeconomic front, trade deficit for June 2025 was
recorded at US$2.3 billion, taking FY25 trade deficit to US$26.3 billion, up
9%YoY.
Inflation for June 2025 was recorded at 3.2%YoY as compared
to 3.5%YoY for May, taking FY25 inflation to 4.5%YoY.
Cement sales for FY25 were reported at 46.2 million tons, up
2%YoY, driven by higher exports.
OMC offtakes for FY25 grew to 16.3 million tons, up 7%YoY.
Other major news flow during the week included: 1) SBP buys
US$6.8 billion from market and 2) Aurangzeb advances strategic partnerships on
sidelines of Fourth International Conference for Financing Development in
Spain.
Commercial Banks, Textile Spinning, Insurance, and
Miscellaneous, were amongst the top performing sectors, while Woollen, Jute,
Glass & Ceramics, and Leasing Companies were amongst the worst performers.
Major buying of US$22.2 million was recorded by Mutual Funds.
Foreigners were net seller during the week, with a net sell of US$15.3 million.
Top performing scrips of the week were: GADT, AICL, and FABL,
while laggards included: BNWM, GHGL, and
PGLC.
According to AKD Securities, the market is expected to
remain positive in the coming weeks, with forward inflation for FY26 projected
at 4.4%YoY, indicating substantial room for monetary easing, which would serve
as a catalyst for equities.
The benchmark index 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.
The top picks of the brokerage house include: OGDC, PPL,
PSO, FFC, ENGROH, MCB, HBL, LUCK, FCCL, INDU, and SYS
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