The decline was mainly driven by higher dividend-yielding
sectors, including Fertilizer, E&P, and Banks, as stocks prices corrected
adjusting their dividend yields in line to rising secondary yields.
Notably, in the last T-Bills auction, cutoff yields
increased, taking 12-month yields to 11.59%, as investors reacted to a
lower-than-expected policy rate cut and opted to wait for the IMF review.
Trade deficit widened by 18%YoY to US$2.3 billion in January
2025, driven by a 10%YoY rise in imports.
On a positive note, inflation eased to a nine-year low of
2.4%YoY in January.
The Sindh and Baluchistan assemblies passed the agriculture
income tax bill during the week, complying another IMF condition ahead of the
upcoming review.
President Asif Zardari's visit to China generated positive
sentiment, with discussions on CPEC Phase-II continuing to unfold.
Market participation declined, with average daily traded volume
falling 13%WoW to 434 million shares, from 498 million shares in the earlier
week.
On a positive note foreign exchange reserves held by the
State Bank of Pakistan (SBP) increased by US$46 million to US$11.4 billion as
of January 31, 2025.
Other major news flow during the week included: 1) Pakistan
and SFD sign US$1.61 billion agreements to boost economic cooperation, 2) FBR
faces PKR468 billion shortfall in 7MFY25 revenue collection, 3) sales of POL
rise 4%YoY in the first seven months of the current financial year, 4) Cement
dispatches increased by 14%YoY in January, and 5) POL price were increased in the
last fortnightly review.
Among the various sectors only REIT was a positive performer,
while Refinery, Transport, OMC, E&P, and Technology sectors witnessed
erosion in value.
Major selling was recorded by Mutual Funds with a net sell
of US$5.5 million, barring sale of 6.0% stake of PKGS by Enso AB. Individuals
absorbed most of the selling with a net buy of US$7.9 million.
Top performing scrips of the week were: SAZEW, AICL, NPL,
MUGHAL, and INIL, while laggards included: ENGROH, MTL, POL, PTC, and ATLH.
According to AKD Securities, the market outlook remains
positive, with the market expected to largely being driven by specific scrips
and sectors, following any trigger or corporate results.
The upcoming MSCI review next week could serve as a potential catalyst for market sentiments. Over the medium term, the benchmark index is anticipated to sustain its upward momentum through CY25, 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.
