Stocks set to extend rally on foreign flows, economic data

KARACHI: The stocks are poised to extend their record-breaking run next week, as foreign investors pile into the market amid signs of economic recovery and monetary easing, dealers said.

The benchmark KSE 100 Index rose 4.4 percent this week to close at an all-time high of 61,691 points on Friday, boosted by net foreign buying of $56.7 million, the highest in more than two years.

The stock market continued its bullish momentum of the last several weeks in the outgoing week except some technical correction during the week when investors booked some profits on Thursday.

However it again rebounded on the last day of the week when the index rose to record 61,691 points level.

The market was also supported by a slew of positive economic indicators, including a lower trade deficit, a higher-than-expected tax collection, and a stable foreign exchange reserve position, analysts said.

"The market is in a bullish mode as foreign investors are showing confidence in Pakistan's economic outlook and the government's reform agenda," said a dealer.

Topline Securities in a weekly note said the market gained 4.4 percent week-onweek largely due to continuous buying by foreign corporate and further decline in T-Bill yields in auction held during the week, which provided further support to the notion that market expects policy rate to decline going forward.

"Major economic numbers that came in during the outgoing week were also supported the market as National Accounts Committee (NAC) releasing quarterly GDP estimated for 1QFY24 at 2.13 percent, trade deficit for Nov-2023 coming in $1.888 billion (down by 13 percent month-on-month) and CPI for the month of November clocking in at 29.2 percent year-on-year."

The brokerage said investor participation in market continued to remain on higher side as average daily traded volume and value stood at 626 million shares and Rs23 billion, respectively

JS Research said the benchmark continued to post positive returns closing the week at 61,691 points level. "Volumes and inflows remained encouraging, with ADTO reporting 8 percent week-on-week increase and FIPI rising 126 percent week-on-week.

T-bill cut-off yields were lowered by 5-7bps for 3-12M papers in the auction conducted during the week."

During the week, the FBR released provisional tax collection data for Nov-23, where collection exceeded by Rs91 billion in the first five months of the current fiscal year from the target.

Moreover, the government decided to keep petrol prices unchanged for the upcoming fortnightly while diesel prices were reduced by Rs7/liter.

During the week, PBS commenced releasing of quarterly growth figures where the GDP registered a 2.13 percent growth for 1QFY24 (FY24 govt target of 3.5%) which was primarily led by the agriculture sector.

SBP foreign exchange reserves also remained stable at $7.2 billion. Roll-over of Saudi credit worth $3bn for 12-months was a relief.

During the week, Islamabad High Court suspended SRO issued by FBR for collection of 40 percent tax on windfall gain made the banks.

Within cement sector, market saw major price hike announcement by players in the North, FCCL commissioned its 6,500tpd greenfield cement plant expansion while Lucky Cement concluded its share buy-back from the market - which triggered activity in cement sector stocks.