KARACHI: The Pakistan stock market surged to an all-time high during the outgoing week, supported by strong valuations and positive economic indicators. Analysts predict this bullish momentum is likely to continue into the upcoming week as investors focus on stocks with robust earnings and attractive dividend potential.
“We expect the January effect to continue during the upcoming week. With the closing of 2QFY25/4QCY24, the market participants will now be focusing on scrips which could have robust earnings and hefty dividend potential,” said a report of Arif Habib Research.
The market remained jubilant throughout the week, with New Year’s Euphoria coming into play since the index closed at its highest-ever level of 117,587 points. This week, the government announced a five-year economic growth plan under the ‘Uraan Pakistan Programme’, which aims to achieve sustainable development and economic stability.
The market surged by 6,236 points or 5.6 per cent week-on-week, emerging as the world’s best-performing market in terms of USD return. Average volumes arrived at 1,044 million shares (up 31 per cent WoW), while the average value traded settled at $156 million (up 1.0 per cent WoW).
Foreigner buying witnessed during this week clocked in at $0.9 million compared to a net sell of $6.8 million last week. Major buying was witnessed in E&P ($1.2 million) followed by all other sectors ($0.8 million). On the local front, selling was reported by companies ($11.3 million) and other organizations ($9.1 million).
Sector-wise positive contributions came from fertiliser (1,439 points), banks (560 points), inv. banks/inv. cos./securities cos. (221 points), automobile assembler (214 points) and power (82 points). Scrip-wise positive contributors were EFERT (614 points), FFC (306 points), MTL (296 points), DAWH (273 points) and HBL (246 points).
The sectors that contributed negatively were cement (164 points), E&Ps (159 points) and OMCs (127 points). Scrip-wise negative contributions came from MCB (107 points), FCCL (101 points), PSO (89 points), KOHC (69 points) and SYS (65 points).
Nabeel Haroon, an analyst at Topline Securities, said the KSE-100 index gain can be attributed to the CPI Inflation number for December that came at 4.1 per cent during the week (vs 4.9 per cent in November 2024) -- making it the lowest reading in 81 months. Low inflation number has increased investor optimism for a cut in the policy rate in the monetary policy meeting during January.
Analyst Wadee Zaman at JS Research said the KSE-100 continued the bullish momentum closing at its highest level. “The week started with inflation data for December-2024 which clocked in at 4.1 per cent YoY, marking the lowest CPI reading in over 6.5 years. This decline is mainly due to the base effect of last year’s elevated inflation,” he said.
Furthermore, trade balance numbers released this week showed a significant deficit of $2.4 billion. The FBR tax revenue collection stood at Rs5.6 billion, showing a significant tax shortfall of Rs386 billion in 1HFY24.
The Ministry of Economic Affairs also signed a $200 million loan agreement with the ADB for power distribution projects during the week. Meanwhile, petroleum figures for the month of December 2024 depicted an increase of 3.0 per cent YoY in POL sales, however, on a MoM basis, POL sales saw a significant drop of 19 per cent.
Cement sales depicted a 2.0 per cent increase YoY. The increase was weighed down by a 5.0 per cent decline in local dispatches while export dispatches were up 49 per cent YoY.
Moreover, the National Accounts Committee (NAC) released GDP growth rates for 1QFY25, in which growth arrived at 0.92 per cent, contributed by growth in the agriculture and service sector of 1.15 per cent and 1.43 per cent, respectively.