Stocks close higher amid expectation of lower inflation

KARACHI: Stocks closed higher on Friday, as the market recovered much of the losses of the earlier week amid reports of the proposed over Rs1.2 trillion PSDP in the federal budget FY25 and expectations for lower inflation numbers for May.

The Pakistan Stock Exchange’s (PSX) benchmark KSE 100-share Index increased by 1,000.35 points or 1.34 per cent to 75,878.48 points against 74,878.12 points recorded in the last session. The highest index of the day remained at 75,953.74 points while the lowest level was recorded at 74,989.26 points.

Analyst Ahsan Mehanti at Arif Habib Corp said, “Stocks surged across the board ahead of the federal budget FY25 on reports of the proposed PSDP of over R1.22 trillion; the GDP growth target at 3.6 per cent for FY25; and the likely resolution of over $2 billion CPEC projects and China’s IPPs dues during the PM visit’s to China next week.”

He said the expected fall in SBP policy rates amid a slash in govt bond rates and upbeat SPI for the week up by a meagre 0.11 per cent and pre-budget speculations on capital market proposals played a catalyst role in the bullish close.

The KSE-30 index increased by 355.19 points or 1.48 per cent to 24,343.07 points against 23,987.88 points.

Traded shares increased by 112.7 million shares to 523.3 million shares from 410.575 million shares. The trading value dropped to Rs14.922 billion from Rs16.500 billion. Market capital narrowed to Rs10.066 trillion against Rs10.083 trillion. Of 413 companies active in the session, 161 closed in green, 196 in red and 56 remained unchanged.

Nabeel Haroon, an analyst at Topline Securities, said a positive session was observed at the exchange as the index gained 1.34 per cent to close at 75,878 level (up by 1,000 points).

“This positivity can be attributed to recovery in market where index declined by 1,100 points from start of the week to yesterday’s close,” he said. “CPI inflation number that will come in tomorrow also garnered investor interest in the market on expectation of MoM decline in CPI inflation number from 13 to 13.5 per cent for the month of May (vs 17.3 percent in April 2024).”

Major positive contribution to the index came from SYS, HUBC, MEBl, ENGRO, FFC and MCB, as they cumulatively contributed 548 points to the index.

The highest increase was recorded in Sazgar Engineering Works Limited shares, which rose by Rs58.23 to Rs786.14 per share, followed by Hoechst Pakistan Limited, which increased by Rs32.65 to Rs1,400 per share. A significant decline was noted in PIA Holding Company Limited B, which fell by Rs67.20 to Rs775.93 per share, Shahmurad Sugar Mills Limited followed it, which closed lower by Rs35.37 to Rs406.80 per share.

Brokerage Arif Habib Ltd stated PSX concluded the week with minimal declines, as a robust Friday session helped mitigate the overall losses. The KSE-100 index experienced a slight week-on-week (WoW) decline of 0.17 per cent.

Both the KSE-100 and KSE-30 indices continue to hover around their critical levels of 75,000 and 24,000 points, respectively. Market analysts suggest that the coming week should offer more clarity regarding the near-term direction of the market.

On the weekly charts, the 75,000 level for the KSE-100 and the 24,000 level for the KSE-30 appear to be forming as potential support levels. If these supports hold, higher targets could be achievable in the near future, maintaining a bullish outlook for the indices.

K-Electric Ltd remained the volume leader with 62.228 million shares which closed higher by 10 paisas to Rs4.96 per share. Dewan Cement followed it with 31.643 million shares, which closed lower by 12 paisas to Rs10.94 per share.

Other significant turnover stocks included WorldCall Telecom, Dewan Motors, Symmetry Group Ltd, Fauji Cement, Faysal Bank, Hum Network, PIA Holding Company and Pak Elektron. In the futures market, 314 companies recorded trading, of which 214 increased, 89 decreased and 11 remained unchanged.