Stocks likely to move upward amid financial earnings season

KARACHI: Pakistan stocks closed slightly lower during the outgoing week amid consolidation at the peak level. However, the market is expected to maintain upward momentum amid expectations of positive financial earnings.

“We expect the market to maintain its upward trajectory next week as the result season progresses, with several stocks likely to attract investor attention due to anticipated strong financial performance,” stated brokerage Arif Habib Ltd.

The market’s bull run persisted this week, with the index reaching a record high of over 86,000 on Wednesday. The rally was fuelled by investor optimism surrounding the Shanghai Cooperation Organisation (SCO) summit.

The market closed at 85,250 points, marking a decline of 233.3 points or 0.27 per cent week-on-week. Average volumes arrived at 442 million shares (down by 15.5 per cent WoW), while the average value traded settled at $81 million (down by 24.5 per cent WoW).

Foreigner selling continued this week, clocking in at $11.6 million compared to a net sell of $22.6 million last week. Major selling was witnessed in other sectors ($7.4 million), followed by fertilizer ($1.6 million). On the local front, companies reported buying ($25.8 million), followed by mutual funds ($7.6 million).

Sector-wise, negative contributions came from commercial banks (293 points), power generation (131 points), fertilizer (95 points), cement (65 points), and paper and board (28 points). Scrip-wise, negative contributors were POL (180 points), HUBC (142 points), MCB (134 points), UBL (119 points), and Engro (108 points).

The sectors that mainly contributed positively included refinery (93 points), tobacco (82 points), engineering (65 points), pharmaceutical (49 points), and automobile assemblers (34 points). Scrip-wise positive contributions came from MARI (173 points), ATRL (101 points), PAKT (82 points), FFC (65 points), and INDU (58 points).

Analyst Wadee Zaman at JS Research said the key highlight of the week was Pakistan’s successful hosting of the SCO summit, where Pakistan and China agreed to further enhance bilateral cooperation in multiple sectors, including security, education, agriculture, and science and technology. In addition, the inauguration of Gwadar Intl Airport during the Chinese PM’s visit to Pakistan during the week was also a key highlight.

In other news, after the termination of five IPP contracts, the governmenst is now proposing to halt payments to 18 other IPPs with a total capacity of 4,267MW.

Maaz Mullah, analyst at Topline Securities, said Pakistan successfully concluded the SCO summit, which boosted hopes for regional political and economic stability, enhancing market confidence.

In the T-Bill auction held during the week, the government raised Rs716 billion against a target of Rs400 billion, with participation reaching Rs1,313 billion. The yield on the 6-month bond fell by 5bps, while the 12-month bond yield remained flat.

In the textile sector, Pakistan’s exports saw an 18 per cent YoY increase, reaching $1.6 billion in October 2024. However, exports were down by 2.0 per cent month-on-month (MoM) compared to the previous month.

On the economic front, Large-Scale Manufacturing Index (LSMI) output recorded a 2.6 per cent YoY decline in August 24, though it saw a sequential recovery of 4.7 per cent MoM.

Pakistan’s trade deficit widened by 24 per cent YoY to $1.8 billion in September 24. Moreover, the SBP reserves grew by $215 million, bringing the total to $11 billion. Meanwhile, the rupee depreciated against the US dollar by 0.02 or 0.01 per cent WoW, closing at 277.6.