Stocks likely to stay positive amid ongoing results season

KARACHI: While stocks closed slightly lower in range-bound trading during the outgoing week amid political uncertainty, the market is expected to bounce back and stay positive in the upcoming week because of the ongoing results season.

“We anticipate the market to remain positive in the coming week, buoyed by the ongoing results season,” stated brokerage Arif Habib Ltd. “Investors will be paying close attention to any updates on the IMF’s executive board meeting.”

During the four-day week, the market remained range-bound. The week started on a positive note as on Monday, Pakistan’s weight in the FM space increased to 3.9 per cent in the MSCI review.

The market closed at 78,045 points, losing 525 points or 0.7 per cent WoW.

Average volumes arrived at 553 million shares (up 12.2 per cent WoW), while the average value traded settled at $75 million (up 1.1 per cent WoW).

Foreigner buying was observed during this week, clocking in at $5.26 million (four days) compared to a net buy of $1.41 million last week. Major buying was witnessed in FMCG ($3.39 million) and banks ($0.8 million). On the local front, selling was reported by companies ($4.4 million) followed by banks/DFIs ($3.2 million).

Sector-wise positive contributions came from E&P (267 points), leather & tanners (42 points), fertilizers (23 points), investment bankings (8 points) and sugar (6 points). Scrip-wise positive contributors were MARI (249 points), MCB (147 points), POL (75 points), FFC (71 points), and JVDC (46 points).

The sectors that mainly contributed negatively were cement (354 points), banks (210 points), power (95 points), auto assembler (54 points) and auto parts (43 points). Scrip-wise negative contributions came from MEBL (161 points), LUCK (134 points), BAHL (99 points), OGDC (56 points), and MTL (55 points).

Analyst Wadee Zaman at JS Research said the KSE-100 index remained largely range-bound throughout the week. The market experienced some recovery towards the end of the week, fuelled by expectations of single-digit inflation -- a milestone not seen in the past three years -- which could lead to a potential policy rate cut in the upcoming monetary policy meeting in Sep-2024.

In the MSCI’s quarterly review, Sazgar Engineering was moved from the MSCI Small Cap Index to the MSCI Frontier Markets Index, while six stocks were added to the small cap index and two were removed.

Nabeel Haroon, an analyst at Topline Securities, said the slight decline in the KSE-100 index can be attributed to a lack of triggers in the market.

On the economic front, the SBP’s foreign exchange reserves rose by $119 million WoW, reaching $9.2 billion.

The government reduced petrol prices by Rs8.47 per litre and diesel prices by Rs6.7 per litre for the current fortnight.

Meanwhile, large scale manufacturing (LSM) data showed a flat YoY growth of 0.92 per cent. Furthermore, the auto sector sales (PAMA) declined by 36 per cent MoM, halting the recent recovery; however, the figures were still up by 70 per cent YoY on a low base.

The trade deficit increased by 21 per cent YoY to $2 billion during July 2024. The rupee depreciated against the dollar by 0.15 or 0.05 per cent to clock at 278.7.

Other major news: July petroleum imports increased 60 per cent to $1.3 billion YoY and July textile group exports dropped 3.1 per cent to $1.27 billion YoY.