Overall, Banks, Power, and Pharma sectors were the primary
contributors to the weekly index rally.
On the macro front, Pakistan’s current account for December
2024 recorded a surplus of US$582 million, driven by 9%YoY increase in
remittances. This brings the 1HFY25 current account to a surplus of US$1.2 billion
as against a deficit of US$1.4 billion during the same period last year.
Circular debt pertaining to power sector decreased by 11%YoY
in November 2024, falling to PKR2.38 trillion, and the continuation of this
trend is expected to improve the cash-flow situation for the country’s energy
sector.
With easing prices of seasonal perishable food items, weekly
inflation (SPI) declined to a 7-year low of 1.2%YoY. As against this, industrial
activity remained subdued, with the LSM index down by 1.3%YoY in 5MFY25.
Market participation also dropped, with average daily traded
volume falling by 29%WoW to 558 million shares, from 782 million shares in the
earlier week.
Foreign exchange reserves held by State Bank of Pakistan (SBP)
rose by US$30 million to US$11.7 billion as of January 10, 2025.
Other major news flow during the week included: 1) Saudi
firm Manara likely to invest in Reko Diq mine 2) World Bank pledges US$40 billion
to Pakistan under 10-year framework, 3) Urea sales increased by 58%YoY during CY24
to 6.6 million tons, 4) prices of POL products increased and 5) Car sales surge
by 51%YoY in 1HFY25.
Refinery, Pharmaceuticals, and Power generation &
distribution were amongst the top performing sectors, while Jute, Leasing
companies, and Sugar were the laggards.
Major net selling was recorded by Foreigners and Mutual
Funds with a total net sell of US$15.7 million. Individuals and Companies
absorbed most of the selling with a net buy of US$21.3 million.
Top performing scrips of the week were: SEARL, GLAXO, ATRL,
NRL, and PSEL, while laggards included: ENGROH, PABC, JDWS, AKBL, PGLC.
According to Pakistan’s leading brokerage house, AKD Securities
the PSX is expected to maintain its positive trajectory, driven by an
anticipated shift of funds from fixed income securities to equities amid
falling fixed income yields.
With easing inflation, the upcoming MPC meeting, scheduled
on January 27, 2025, will remain a key focus.
Over the medium term, the KSE-100 is anticipated to sustain
its upward momentum, primarily driven by the strong profitability of fertilizer
companies, higher sustainable RoEs of banks and improving cash flows of
E&Ps and OMCs, benefitting from falling interest rates.
