Stocks set to continue rally on earnings momentum, monetary policy meet

KARACHI: Stocks soared to new heights this week, buoyed by robust economic indicators, with the upward trajectory expected to persist into the coming week, driven by the ongoing earnings season and key monetary policy event, traders said.

“In the upcoming week, we expect the market to remain positive,” stated brokerage Arif Habib Ltd. “The investors will be closely monitoring the MPC meeting in the upcoming week, where in the event of a rate cut the momentum will witness a further boost.”

Furthermore, developments related to the new program with the IMF will further improve market sentiment. Moreover, the ongoing result season is expected to continue in the next week, where certain scrips are anticipated to be in the limelight amid the expectation of robust results.

The market sentiment remained positive throughout the week, closing the week at an all-time high level of 72,743 points.

Market sentiment was fuelled by strong performances in certain scrips during the ongoing result season. Furthermore, the anticipation of an interest rate cut and the scheduled executive board meeting of the IMF next week further maintained the momentum.

The market closed at 72,743 gaining 1,833 points (up by 2.58 percent) week-on-week. Average volumes arrived at 650 million shares (up by 32 percent WoW) while the average value traded settled at $ 94 million (up by 22 percent WoW).

Foreigner buying continued during this week, clocking in at $3.0 million compared to a net buy of $33.9 million last week. Major buying was witnessed in E&P ($1.9 million) and commercial banks ($1.2 million). On the local front, selling was reported by Insurance ($13.1 million) followed by NBFCs ($0.1 million).

Sector-wise positive contributions came from fertiliser (562 points), cement (380 points), banks (348 points), E&Ps (201 points), and power (155 points). Scrip-wise positive contributors were EFERT (332 points), UBL (214 points), LUCK (207 points), MARI (164 points), and HUBC (156 points).

Meanwhile, the sectors which contributed negatively were tobacco (54 points), miscellaneous (48 points), OMCs (39 points), refinery (29 points), and chemical (19 points).

Scrip-wise negative contributions came from PAKT (55 points), PSEL (49 points), POL (44 points), NBP (29 points), and MEBL (27 points).

Muhammad Waqas Ghani, an analyst at JS Research, said fertiliser sector stocks remained the top performers this week.

The week started with Iranian President Raisi's visit to Pakistan. The two countries agreed to increase the volume of bilateral trade to US$10 billion in the next five years following the signing of multiple agreements and MoUs for cooperation in different areas.

Nabeel Haroon at Topline Securities said the positivity in the market can be attributed to investors’ expectation of an interest rate cut in the upcoming monetary policy meeting on Monday.

On the economic front, the current account balance for March reached a surplus of $619 million, marking the highest level in eight years and the third highest in twenty years.

This increase was primarily due to a 31 percent month-on-month rise in remittances, which typically occurs during Ramadan as a similar trend was observed during the same period last year.

Consequently, the deficit balance for 9MFY24 was restricted to $508 million, an 87 percent year-on-year decline.

Furthermore, SBP data showed that inflows through the RDA rose by $182 million during March, marking a 29 percent month-on-month increase. Moreover, SBP reserves remained stable at close to US$8 billion.

Meanwhile, foreign direct investment hit the highest level since June’22 at $258 million. During the week rupee closed at 278.39 against dollar , depreciating by Rs0.08 or 0.03 percent week-on-week.