Stocks likely to keep investor interest high

KARACHI: Stocks reached an all-time high during the outgoing week following the monetary policy committee's decision to cut the key policy rate down by 2.5 per cent while the market is expected to keep the positive momentum intact next week as well.

“We expect the market to maintain positive momentum in the coming week, driven by certain scrips trading at attractive valuations, which are likely to continue enticing investor interest,” stated brokerage Arif Habib Ltd.

Throughout the week the market showcased stellar performance, taking the index level to an all-time high to 93,292 points. This robust momentum was driven by the State Bank of Pakistan's historic 250bps policy rate cut, lowering the rate to 15 per cent.

The market closed at 93,292 points, up 2432 points or 2.7 per cent week-on-week. Average volumes arrived at 735 million shares (up 31.3 per cent WoW), while the average value traded settled at $107 million (up 12.3 per cent WoW).

Foreigner selling was witnessed during this week, clocking in at $4.65 million compared to a net buy of $1.97 million last week. Major selling was witnessed in all other sectors ($2.3 million) followed by fertiliser ($2.2 million). On the local front, buying was reported by mutual funds ($22 million) followed by other organisations ($ 3.2 million).

Sector-wise positive contributions came from fertiliser (505 points), cement (404 points), power generation and distribution (376 points), oil and gas exploration companies (320 points) and automobile assembler (288 points). Scrip-wise positive contributors were OGDC (311 points), HUBC (297 points), LUCK (236 points), Engro (236 points), and SYS (138 points).

The sectors that mainly contributed negatively were commercial banks (337 points), leather and tanneries (29 points), and tobacco (9 points). Scrip-wise negative contributions came from UBL (117 points), HBL (91 points), MCB (89 points), BAHL (54 points), and MEHT (34 points).

Analyst Muhammad Waqas Ghani at JS Research said during the week, the State Bank of Pakistan (SBP) announced a cut in the policy rate by an additional 250bps, taking the rate to 15 per cent. “The decision was mainly influenced by the declining inflation trend. This marks the fourth consecutive rate cut in the ongoing monetary easing cycle bringing the cumulative reduction to 700bps from its peak of 22 percent.”

This week, the market gained a boost as eight Pakistani companies were added to the MSCI Frontier Markets Small Cap Index, a move expected to attract global investors and accelerate foreign fund inflows.

As per FBR data, income tax collection has faced a shortfall during 4MFY25. In other news, the government is preparing to finalize its strategy this weekend for upcoming talks with the IMF Staff Mission scheduled from November 11-15, 2024. Moreover, Prime Minister Sharif has sent a special delegation to Saudi Arabia to finalize the US$2.8 billion MoUs recently signed between the two countries.

According to SBP data, remittances for October 2024 reached $3.05 billion, marking a 24 per cent increase compared to the same period last year. SBP reserves during the week remained stable at $11.2 billion.

Nabeel Haroon, analyst at Topline Securities, said the KSE-100 index gained 2.68 percent on WoW basis, this gain can be largely be attributed to monetary policy meeting during the week in which the SBP decreased the policy rate by 2.5 per cent to 15 per cent.

The government of Pakistan raised Rs339 billion across various tenors through Ijarah Sukuk, with yields on fixed rental rate (FRR) instruments declining by 43-104bps. During the week, the rupee remained stable, and closed at 277.95 against the dollar.