On the macro front, developments remained broadly positive
as S&P upgraded Pakistan’s credit rating by one notch to B– after three
years. Subsequently, Pak Eurobond yields declined across different maturities.
Moreover, aforementioned improvement in credit rating along with tightening of
illicit forex market, supported a 0.5%WoW appreciation in PKR to 283.45/US$, highest
weekly gain in 93 weeks.
In last T-Bills auction, yields declined by to 10.85% for
one-month paper, indicating expectations of rate cut in the upcoming Monetary
Policy Committee (MPC) meeting scheduled for July 30, 2025. AKD Securities
expects SBP to resume monetary easing with a 50bps reduction, supported by
moderating inflation and easing geopolitical tensions, with July 2025 CPI
projected at 2.5%YoY, down from 3.2%YoY in previous month.
The GoP has formed a task force to resolve the PKR2.8 trillion
gas circular debt, with a proposed plan involving commercial borrowing and the
imposition of a special levy to fund repayments.
Foreign exchange reserves help by State Bank of Pakistan
(SBP) declined to US$14.5 billion as of July 18, 2025.
Other major news flow during the week included: 1) ADB
revised Pakistan's FY25 growth to 2.7 percent, 2) IMF tied 4% additional sales
tax removal to wider tax net, 3) Foreign investors repatriated US$2.2 billion
in FY25, 4) Power generation remained flat in FY25, and 5) ECC approved PKR100 billion
financing for 50,000 housing units.
Food, Transport, and Auto assembler were the top performing
sectors, while Vanaspati & allied industries, while Woollen, and Leather were
among the laggards.
Major net selling was recorded by other organizations and
Foreigners with a net sell of US$16.1 million. Mutual funds and Individuals
absorbed most of the selling with a net buy of US$12.8 million.
Top performing scrips of the week were: UPFL, HGFA, FHAM,
ATLH, and HUMNL, while the laggards included: PSEL, PKGP, BNWM, ABL, and SRVI.
According to AKD Securities, market is expected to remain
positive in the coming weeks, with the upcoming MPC and corporate results
remaining in the limelight.
The benchmark index is anticipated to sustain its upward
trajectory, with a target of over 165,000 points by end December 2025, primarily
driven by strong earnings in Fertilizers, sustained ROEs in Banks, and
improving cash flows of E&Ps and OMCs, benefiting from declining interest
rates and economic stability.
The top picks of the brokerage house include: OGDC, PPL,
PSO, FFC, ENGROH, MCB, HBL, FCCL, KOHC, INDU, and SYS.
