PSX records another record high closing

Performance of Pakistan Stock Exchange (PSX) remained strong throughout the week with the benchmark index recording its highest ever closing of 118,770 points and an intraday high of 119,422 points on Thursday. However, profit taking was seen on the last trading day with the index closing at 118,442 points on Friday, March 21, 2025 - up 2,906 points or 2.52%WoW.

The optimism was driven by expectations of a successful conclusion of the IMF staff level agreement, where revisions to macroeconomic targets under the MEFP were presented, including downward adjustments to FBR’s annual tax collection target, inflation, and GDP growth.

An extra up to US$1.5 billion under climate financing was discussed as well. Additionally, positive momentum was also driven by the IMF’s approval of government’s plan to borrow PKR1.25 trillion from commercial banks to resolve circular debt, which led a rally in the E&P and OMC sectors.

On the macroeconomic front, Current Account Deficit for February 2025 was reported at US$12 million taking 8MFY25 number to a surplus of US$691 million. Moreover, fertilizer offtake dropped 36%YoY during February 2025, where Urea offtake was recorded at 347,000 tons, down 36%YoY.

Auto financing increased by 3%MoM during February 2025 as well, marking a rise for the second consecutive month.

Market participation also improved, with average daily traded volume rising by 51%WoW to 508 million shares from 337 million shares in the earlier week.

Foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$49 million to US$11.15 billion as of March 14, 2025.

Other major news flow during the week included: 1) 8MFY25 exports were up 8.4%YoY, 2) Saudi Arabia approved US$100 million Oil Facility to resume from the ongoing month, 3) World Bank approved US$102 million for Pakistan, 4) SPI declined to 1.7%YoY, and 5) GoP agreed to decrease import duties to 7.1% from the current 10.6%, as per IMF conditions.

On the main board, E&P, Cable & Electrical goods, and Refinery were amongst the top performers, while Fertilizer and Commercial Banks reported a decline.

Major selling was recorded by Individuals and Companies with a net sell of US$10.5 million. Mutual funds absorbed most of the selling with a net buy of US$13.9 million.

Top performing scrips of the week were: NML, MARI, PAEL, IBFL, and TRG, while laggards included: SCBPL, AICL, FATIMA, EFERT, and FABL.

According to AKD Securities, the market is expected to remain positive in the coming weeks, with the potential announcement of a staff-level agreement in the near term serving as a key trigger for momentum. The benchmark index 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 includes, OGDC, PPL, PSO, FFC, ENGROH, MEBL, MCB, HBL, LUCK, FCCL, INDU, ILP, and SYS.

 

 

Pakistan Stock Exchange gains 531 points

The week ending January 26, 2024 started on a positive note, riding the wave of optimism generated by the IMF's favorable review report. The benchmark index closed the week with gains of 531 points at 63,812.

Following this upbeat start, the E&P sector took center stage over developments on clearance of circular debt amounting to PKR1.2 trillion.

As the week drew to a close, conflicting narratives emerged, creating uncertainty around the viability of the circular debt plan. News reports, citing insiders, presented divergent stories—one suggesting the imminent presentation of the plan to the IMF and another reporting objections raised by the Finance Ministry. This uncertainty contributed to corrections observed in the last two trading days, with the likelihood of rate cuts diminishing.

Although discussions around rate cuts gained traction with reduction in cut-off yields in the last T-bills auction, the specter of persistent inflation, projected at 28% for Jan’23, tempered expectations of any rate cut.

The foreign exchange reserves held by State Bank of Pakistan witnessed a weekly increase of US$243 million. The inflow of US$700 million from the IMF was constrained by debt repayments.

Market participation remained cautious due to uncertainties surrounding the circular debt plan and the impending Monetary Policy Committee stance, with average daily traded volume exhibiting a decline of 16%WoW at 392 million shares from 467 million shares in the earlier week.

Other major news flows during the week included: 1) Pakistan and Kuwait to set up US$1 billion fund and 2) Cabinet body set to okay brown-field refinery policy.

Textile Composite, E&P, and Leather & Tanneries companies were amongst the top performers, while Automobile parts & Accessories, Transport, and Property were amongst the worst performers.

Major net selling was recorded by Foreigners with a net sell of US$22.7 million. Insurance absorbed most of the selling with a net buy of US$9.6 million.

Top performers of the week were: OGDC, ATLH, APL, LCI, and HMB, while top laggards included: HCAR, PTC, GADT, JVDC, PIBTL.

Market outlook hinges significantly on interest rate move scheduled to be announced on Monday January 29. While the status quo has already been factored into the market expectations, any surprise rate cut could likely trigger an immediate rally.

The resolution of the circular debt clearance plan in the upcoming week is anticipated to provide clarity to market participants, especially in the context of E&P stocks.

As the elections draw near, the settling dust is indicative of stabilization and with successful completion is anticipated to inject positive momentum into the market.

Investors are advised to seize every opportunity for the accumulation of blue-chip stocks.