The week started on a negative note as the State Bank of Pakistan (SBP) decided to leave the interest rate unchanged, coupled with the IMF raising concern over government’s plan for resolving PKR1.25 trillion circular debt through commercial bank borrowing, kept investors cautious.
However, positive developments in ongoing policy-level
discussions with IMF improved sentiment during the last two trading sessions, enabling
the benchmark index to close on Friday at 115,536 points, with weekly gains of
1,137 points or up 1.0%WoW.
As per news flows, IMF has agreed to cut the FBR tax target
by PKR620 billion, lowering total revenue target to PKR12.35 trillion, while
assuring readjustments in expenditure by authorities to maintain a primary
surplus of PKR2.4 trillion.
Notably, FBR tax collection during 8MFY25 missed the target
by PKR600 billion.
The IMF revised Pakistan’s GDP growth forecast to range
between 2.0 to 2.25% from 3.6% earlier, while also lowering its inflation
projection to 7.0% from 12.5%.
Meanwhile, Moody’s upgraded Pakistan’s banking sector
outlook to positive from stable, along with upward revision in GDP projection.
Worker remittance increased by 39%YoY to US$3.1 billion
during February 2025.
Foreign exchange reserves held by SBP eroded by US$152 million
to US$11.1 billion as of March 07, 2025.
Other major news flow during the week included: 1) China
rolls over US$2 billion loan to Pakistan for one more year, 2) GoP mulls higher
petrol levy amid revenue shortfalls 3) Passenger car sales increased by 44.6%YoY
to 67,135 units during first eight months of the current financial year, 4) GoP
hikes gas tariff for captive power plants on IMF prodding, and 5) ECC approves
amendments to net-metering regulations, cuts buyback rate to PKR10/unit.
Miscellaneous, and Inv. Banks/ Cos. were amongst the top
performing sectors, while Jute, Synthetic & Rayon, and Glass & ceramics
remained laggards.
Major selling was recorded by Mutual Funds with a net sell
of US$7.6 million. Banks absorbed most of the selling with a net buy of US$7.6 million.
Top performing scrips of the week were: PABC, PSO, MARI, JDWS,
and DGKC, while laggards included: IBFL, ISL, TGL, INIL, and PGLC.
According to AKD Securities, the market is expected to
remain positive with the potential announcement of a staff-level agreement on
the first review over the weekend acting as a key trigger for momentum.
The market is anticipated to sustain its 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 pick of the brokerage house include: MEBL, MCB, HBL,
FFC, ENGROH, OGDC, PPL, PSO, LUCK, FCCL, INDU, ILP, and SYS.
