Stocks set to extend gains on IMF programme, Saudi investment hopes

KARACHI: Stocks are expected to extend their gains in the coming week, as investors remain optimistic about the International Monetary Fund (IMF) program and Saudi investment, analysts said.

“The market sentiment is expected to remain positive in the upcoming week,” stated brokerage Arif Habib Ltd. “Investors will closely monitor developments related to a new IMF program, investments from Saudi Arabia and Qatar, and the upcoming Federal Budget 2024-25.”

The market sentiment during the week remained robust, leading the benchmark KSE-100 index to close the week at the highest-ever level of 73,086 points. The arrival of Saudi investors in Pakistan to discuss investment prospects in mining, agriculture, IT, and other industries set the tone for positive momentum in the market.

The index gained 1,183 points or 1.65 percent, arriving at 73,086 points. Average volumes reached 717 million shares (up by 39 percent week-on-week), while the average value traded settled at $88 million (up by 2.4 percent week-on-week).

Foreign buying continued this week, clocking in at $2.7 million compared to a net buy of $8.0 million last week.

Major buying was witnessed in fertilizer ($2.2 million) and cement ($1.4 million). On the local front, selling was reported by other organizations ($4.7 million) followed by brokers ($1.9 million).

Sector-wise, positive contributions came from pharmaceuticals (272 points), power (164 points), technology (123 points), leather & tanneries (115 points), and cable & electrical goods (56 points). Scrip-wise, positive contributors were DAWH (146 points), SRVI (115 points), KAPCO (70 points), GLAXO (67 points), and HINOON (63 points).

The sectors that contributed negatively were E&Ps (132 points) and OMCs (25 points). Meanwhile, scrip-wise negative contributions came from EFERT (122 points), OGDC (59 points), MEBL (48 points), MARI (40 points), and PPL (39 points).

Shagufta Irshad, an analyst at JS Research, said that the Saudi Arabia and Qatar delegations met with Pakistani government officials this week to boost trade ties and investment in Pakistan. The government continued to aim at improving the processing time for the privatization of state-owned enterprises. The Privatization Division (PD) also outlined a strategy for the next 5-year privatization program. PD also sought cabinet approval to transfer 322 million shares of OGDC to the Pak Sovereign Wealth Fund.

Analyst Nabeel Haroon at Topline Securities said this positivity in the market can be attributed to news that after the arrival of the key Saudi delegation this week, Saudi Crown Prince Muhammad Bin Salman is expected to arrive within days to seal investment deals.

News of expectations of an International Monetary Fund (IMF) mission visiting Pakistan this month to discuss a new program also increased investor interest in the market.

On the economic front, the headline inflation was recorded at 17.3 percent in April compared to 20.7 percent in the same period last year, which has paved the way for a potential cut in the policy rate in the upcoming MPC meeting.

Moreover, the remittances during April increased by 28 percent year-on-year. In addition, the State Bank of Pakistan (SBP) reserves have reported an increase of $1.1 billion, reaching $9.1 billion, reflecting the disbursement of the final tranche under the Stand-by Arrangement by the IMF.

The rupee showcased a slight appreciation of Rs0.09 (0.03 percent) week-on-week, arriving at 278.12 against the greenback.