Economic optimism fuels stocks’ positive outlook for post-Eid week

KARACHI: Stocks experienced a robust growth spurt during a shortened two-day trading week ahead of Eid holidays, with the benchmark index climbing approximately 1,900 points, and traders projected that this positive momentum would carry into the next week, supported by key economic developments.

“In the upcoming week, we expect the market to remain positive,” brokerage Arif Habib Ltd said in a market note. “Developments related to SOEs (state-owned enterprises) privatization or the EFF program with the IMF 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.

“Moreover, stocks continue to trade at attractive levels, which could further entice investors. Our preferred stocks are OGDC, MARI, MCB, UBL, MEBL, FABL, HBL, LUCK, MLCF, FCCL, FFC, HUBC, PSO, and IND.”

Overall, the market closed at 70,315 points, increasing by 1,898 points or 2.77 percent week-on-week. Average volumes arrived at 363 million shares (up by 18 percent week-on-week), while the average value traded settled at $59 million.

Foreign buying continued during this week, clocking in at $4.2 million compared to a net buy of $3.9 million last week. Major buying was witnessed in all other sectors ($3.2 million) and commercial banks ($0.8 million).

On the local front, selling was reported by banks/DFIs ($4.9 million) followed by individuals ($3.2 million).

Sector-wise, positive contributions came from commercial banks (563 points), fertilizer (344 points), E&P (250 points), power (179 points), and OMCs (106 points). Scrip-wise, positive contributors were FFC (352 points), HUBC (176 points), MEBL (172 points), UBL (113 points), and MCB (89 points).

Meanwhile, the sectors which mainly contributed negatively were automobile parts (4 points) and insurance (3 points). Scrip-wise, negative contributions came from ENGRO (51 points), DAWH (45 points), BAFL (14 points), ILP (5 points), and KEL (5 points).

Analyst Nabeel Haroon at Topline Securities said the KSE 100 Index gained by 2.77 percent on a WoW basis during the short week before the Eid holidays, as the Prime Minister’s visit to Saudi Arabia with a delegation garnered investor interest in the market.

The commitment shown by Saudi Arabia to expedite the implementation of an investment plan of $5 billion provided further stimulus to the market.

The upcoming finance minister’s trip to Washington to attend the World Bank and International Monetary Fund spring meeting and likely discussion with the IMF for the new program also provided confidence to investors.

During the week, the remittance number for March clocked in at US$2.95 billion (up 31 percent month-on-month and 16 percent year-on-year) – the highest monthly remittances after 22 months. Additionally, during the week, the rupee remained unchanged at 277.94 against dollar.

Other significant news included directives from the Ministry of Finance and the Federal Board of Revenue advising officials to avoid media engagement, potential ‘economic dialogue’ between the US and Pakistan, the appointment of senior officers at 10 Distribution Companies (Discos) by the Federal Investigation Agency (FIA), a commitment to increased cooperation between Foreign Minister Ishaq Dar and United States Secretary of State Antony Blinken, and the government’s plan to borrow Rs4.965 trillion from banks during the April-June quarter.