While the week began on a cautious note due to renewed
concerns over regional instability following the US attacks on Iranian nuclear
facilities, the ceasefire restored investors’ confidence and triggered a sharp
recovery from the second trading day onward.
Market participation dropped despite the rally, with average
daily traded volume falling to 736 million shares from 822 million shares a week
ago, down 10%WoW.
The foreign exchange reserves held by State Bank of Pakistan
(SBP) declined sharply by US$2.7 billion to US$9.1 billion as of June 20, 2025,
the second-largest weekly fall, mainly due to scheduled external debt
repayments.
However, SBP reiterated its June end reserve target of US$14
billion, with US$3.6 billion inflows expected to be reflected in the coming
week. Domestic currency remained largely stable at PKR283.7/US$.
The FY26 Federal Budget was approved on Thursday, with minor
adjustments to tax laws and rates.
On the inflation front, headline CPI for FY26 is projected to
moderate further to 4.4%YoY as compared to 4.5% for FY25, due to a moderate
increase in food and housing indices.
Other major news flow during the week included: 1) Pakistan
and United States eyeing preferential trade deal in talks, 2) Consumer
confidence at highest since 2022, up 25%YoY in 4QCY25, 3) Power generation up
1%YoY in May 2025 on lower tariffs, and 4) RDA inflows were up 14%MoM in May
2025, to US$10.38 billion.
Woollen, Glass & ceramics, and Vanaspati & allied
sectors were amongst the top performers, while Modaraba, ETFs, and Sugar &
allied industries reported declines.
Major selling was recorded by Foreigners and Individuals
with a net sell of US$15.8 million. Mutual funds and Insurance absorbed most of
the selling with a net buy of US$16.1 million.
Top performing scrips of the week were: BNWM, GHGL, NATF,
HUMNL, and PABC, while laggards included: PSEL, PKGP, PGLC, EPCL, and ISL.
According to AKD Securities, the market is expected to
remain positive in the coming weeks, with forward inflation for FY26 projected
at 4.4%YoY, indicating substantial room for monetary easing, which would serve
as a catalyst for equities.
The KSE-100 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.
Top picks of the brokerage house include: OGDC, PPL, PSO,
FFC, ENGROH, MEBL, MCB, HBL, FCCL, INDU, and SYS.
