Stocks close positive, shortened trading week expected to maintain momentum

KARACHI: Stocks concluded the outgoing week on a high note, with expectations set for a positive performance in the upcoming short trading week, which will span only two days before the extended Eid holidays, traders said.

“In the upcoming week, we expect the market to remain positive,” said brokerage Arif Habib Ltd. “Developments related to SOEs (state-owned enterprises) privatisation or EFF (Extended Fund Facility) program with IMF (International Monetary Fund) will further improve market sentiment.”

Furthermore, the result season is expected to commence in the upcoming week, where certain scrips are anticipated to be in the limelight amid the expectation of robust results.

Throughout the 4-day trading week, the market continued its positive momentum and witnessed a surge from 67,005 to 68,417, hitting an all-time high.

Market sentiment was fuelled by promising inflation numbers and the expectation of an interest rate reversal. The headline inflation rate for March clocked in at 20.7 percent on a year-on-year basis, indicating a decline from the previous month, February, which reported a year-on-year inflation rate of 23.1 percent.

The market closed at 68,417 points, increasing by 1,412 points or 2.11 percent week-on-week. Average volumes arrived at 307 million shares (down by 7 percent week-on-week), while the average value traded settled at $42 million.

Foreign buying continued during this week, clocking in at $3.9 million compared to a net buy of $3.6 million last week. Major buying was witnessed in commercial banks ($2.0 million) and fertilizer ($0.9 million).

On the local front, selling was reported by insurance companies ($5.6 million) followed by broker proprietary trading ($1.7 million).

Sector-wise, positive contributions came from fertilizer (478 points), commercial banks (367 points), E&P (153 points), cement (148 points), and pharmaceuticals (97 points). Scrip-wise, positive contributors were DAWH (200 points), ENGRO (157 points), EFERT (101 points), PPL (84 points), and SYS (81 points).

Meanwhile, the sectors that mainly contributed negatively were chemicals (25 points), and paper & board (21 points). Scrip-wise, negative contributions came from PTC (38 points), PAKT (19 points), COLG (17 points), PKGS (17 points), and MARI (17 points).

Muhammad Waqas Ghani, an analyst at JS Research, said that the PIAA's momentum stalled as the stock experienced a 17 percent decline this week, with investors opting to book profits. In addition to the PIAA deal, the government's announcement of plans to sell OGDCL shares to Saudi investors this week spurred buying activity in the stock, resulting in a 3 percent gain.

Nabeel Haroon at Topline Securities said this positivity in the market can be attributed to the recent CPI number for March 2024, which clocked in at 20.68 percent year-on-year (as compared to 23.06 percent in Feb 2024), which increased investors' expectations for a decline in the policy rate in the upcoming monetary policy on April 29, 2024.

The government raised petrol prices by Rs9.66/litre due to increased ex-refinery prices. Moreover, Pakistan's trade deficit shrank 25 percent to $17 billion during 9MFY24 due to a considerable reduction in imports and an increase in exports. The trade deficit for March, however, clocked in higher on both a yearly and monthly basis. In the T-bills auction held this week, cut-off yields increased for the 6-month paper, whereas for the 3-month and 12-month papers, yields remained unchanged. Moreover, SBP reserves remained stable at $8 billion.

Furthermore, the World Bank revised the GDP growth projection to 1.8 percent and kept the inflation target at 26 percent for the current fiscal year, citing hikes in electricity and gas tariffs.