Stocks set to extend gains as IMF deal, budget in focus

KARACHI: Stocks closed higher for the week and the positive sentiment is expected to continue into next week, as investors monitor the federal budget and other investment developments, analysts said on Saturday.

“We expect the positive momentum to continue in the upcoming week,” said brokerage Arif Habib Ltd in a market note. “The market participant will observe developments related to the upcoming Federal Budget 2024-25, the new IMF program, and potential investments from friendly countries.”

The market sentiment remained positive throughout the week, closing the week at an all-time high level of 75,342 points. The strong market performance came on the back of optimism surrounding the potential negotiation of a new package of IMF.

The benchmark KSE-100 gained 2,257 points or +3.09 percent, arriving at 75,342 points. Average volumes arrived at 555 million shares (down by 23 percent week-on-week), while the average value traded settled at $79 million (down by 10 percent WoW).

Foreigner buying continued this week, clocking in at $14.94 million compared to a net buy of $2.73 million last week. Major buying was witnessed in banks ($6.54 million) and E&P ($4.52 million). On the local front, selling was reported by banks / DFIs ($9.85 million) followed by individuals ($2.46 million).

Sector-wise positive contributions came from commercial banks (1,076 points), E&Ps (396 points), fertilizer (196 points), automobile parts & accessories (102 points), and engineering (72 points). Scrip-wise positive contributors were UBL (304 points), POL (201 points), MCB (184 points), MEBL (183 points), and BAHL (158 points).

The sectors that contributed negatively were cable & electrical goods (34 points), power (23 points), and textile composite (20 points). Meanwhile, scrip-wise negative contributions came from PAEL (34 points), TRG (25 points), FCCL (20 points), PSO (19 points), and DGKC (17 points).

Shagufta Irshad, an analyst at JS Research, said the index continued its uptrend during the week and broke the barrier of 75,000. "The index is up 12.9K points or 21 percent CY24TD with banks, fertilizer and E&P sectors being key contributors to the rally."

Analyst Nabeel Haroon at Topline Securities said the positivity in the market can be attributed to the arrival of the IMF team to Pakistan as the country is applying for the 24th IMF program, where news suggests the government wants a 3 to 4-year package to the tune of $6 billion to $8 billion.

On the economic front, MSCI added NBP in its frontier market index (MSCI FM), taking the total number of stocks from Pakistan to 77. There was no change in the MSCI small cap index.

According to the latest report by the Pakistan Bureau of Statistics (PBS), Large Scale Manufacturing (LSM) posted an increase of 2.0 percent year-on-year (YoY) in March 2024, a positive YoY growth for the fourth consecutive month. On a MoM basis, March witnessed a decline in output.

Textile exports’ growth was marginally positive during Apr-24. Meanwhile oil (petroleum products & crude) imports reached a 10-month high at $1.125 billion in April. The current account for April 2024 showed a third consecutive month of surplus.

Foreign Direct Investment for April 2024 clocked in at $359 million (up by 39 percent MoM and 172 percent YoY).

The market also behaved positively in anticipation of a likelihood of a rate cut in the Jun’24 monetary policy committee meeting. In addition, the SBP reserves have reported an increase of $15 million to $9.1 billion. The rupee depreciated by Rs0.09 0.03 percent WoW, arriving at 278.21 against the greenback.