Anticipation of the IMF’s board approval scheduled for September
25, briefly improved investors’ sentiment on Wednesday. However, the positive
sentiments were overshadowed by continuation of foreign selling after
rebalancing of FTSE Russell, political noise, and concerns regarding the
potential termination of contracts with certain IPPs, inducing selling pressure
in power sector heavyweights.
Consequently, power generation and distribution sector
contributed the significant decline, eroding 800 points from the index during
the week.
The FBR is expected to post a shortfall of PKR275 billion in
1QFY25, according to the news flows. In efforts to increase tax revenue, GoP
plans to abolish non-filer status and take strict measures against tax frauds.
Average daily trading volumes declined by 17.1%WoW to 389.35
million shares, as compared to 469.45 million shares traded a week ago.
Foreign exchange reserves by State Bank of Pakistan (SBP)
increased by US$24 million to US$9.53 billion as of September 20, 2024.
On the currency front, PKR largely remained stable against
the greenback throughout the week, closing the week at 277.64 to US$.
Other major news inflow during the week included: 1) IMF
distanced itself from Pakistan's decision to arrange a US$600 million
commercial loan at 11% interest rate, 2) US Assistant Secretary of State Donald
Lu praises 'deeper' ties with Shehbaz government, 3) GoP borrowing surged to
record high, 4) Farmers to get 251 green tractors and 5) ADB may approve
3rd-party guarantee in case of Reko Diq.
Transport, Fertilizer, Inv. Banks/ INV. Cos/ Securities
Cos., Leather & Tanneries and Pharmaceuticals were amongst the top
performers, Power generation & Distribution, Leasing companies, Textile
spinning, Engineering and Jute were amongst the worst performers.
Major net selling was recorded by Foreigners with a net sell
of US$12.44 million, mostly absorbed by Mutual Funds with a net buy of US$16.21
million.
Top performing scrips of the week were: FFC, GLAXO, AKBL,
FFBL, and THALL, while the laggards included: HUBC, PGLC, SML, MARI, and KEL.
Following the approval of the IMF’s executive board and the
subsequent receipt of the first tranche of US$1.02 billion, the market
sentiments are poised to improve.
Additionally, easing inflation with September 2024 CPI
expected at 7.0%YoY, coupled with ongoing monetary easing, is expected to keep
equities in focus.
AKD Securities recommends sectors benefiting from monetary
easing and structural reforms, particularly high-dividend-yielding stocks,
which are expected to rerate as yields align with fixed income returns.
