The momentum was fueled by anticipated continuation of
monetary easing and the country reporting its first-ever quarterly budget
surplus in over 20 years of PKR1.7 trillion during 1QFY25, coupled with strong
corporate results.
Regrettably, Pakistan missed two of the IMF's quarterly
targets: tax collection marking a shortfall of PKR90 billion, and cash surplus
for the provinces, marking a shortfall of PKR182 billion.
CPI for the month was reported at 7.2%YoY, with real
interest rate comfortably above 10% at current policy rate levels.
Trade deficit for October 2024 was reported at US$1.4
billion, with exports for the month at US$2.97 billion, up 4.9%MoM.
Foreign exchange reserves held by State Bank of Pakistan
(SBP) increased by US$116 million WoW at US$11.15 billion as of October 25,
2024.
On the currency front, PKR largely remained stable against
the greenback throughout the week, closing the week at PKR277.7 to a US$.
Other major news flow during the week included: 1) Prime Minister
visited Saudi Arabia and Qatar, 2) Saudi Arabia likely to finalize US$1.2 billion
oil facility by end December this year, 3) Germany seeks COAS help over IPP
deal termination, 4) MoUs signed with Pakistan increased to 34 and 5) T-Bills
yields slip by 64-140bps ahead of inflation data.
Pharmaceutical, Wollen, and Leasing Companies were amongst
the top performing sectors, while Inv.Banks/ Inv.Cos/ Securities Companies,
Leather & Tanneries, and Engineering were amongst the laggards.
Major net selling was recorded by Banks/DFI with a net sell
of US$13.0 million. Insurance and Mutual Funds absorbed most of the selling
with an aggregate net buy of US$12.3 million.
Top performing scrips of the week were: GLAXO, CHCC, NCPL,
SYS, and KAPCO, while top laggards included: KOSM, NBP, PKGS, MUGHAL, and SRVI.
Market is expected to remain positive, with primary focus on
the upcoming Monetary Policy Committee meeting, where an anticipated rate cut
could further bolster market momentum.
Despite the recent rally, valuations remain attractive, with
the market trading at a P/E of 4.0x and offering a dividend yield of 11.4%.
AKD Securities recommend focusing on sectors that stand to
benefit from monetary easing and structural reforms, particularly
high-dividend-yield stocks that are likely to re-rate as yields converge with
fixed-income returns.
Top picks of the brokerage house include: OGDC, PPL, MCB,
UBL, MEBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.
