Stocks expected to stay positive amid earnings season

KARACHI: Pakistan stocks closed slightly upward during the outgoing week. The market is also expected to stay positive in the next week amid the earnings season.

“We expect the market to continue to be positive in the upcoming week,” stated brokerage Arif Habib Ltd. “Investors will be keeping a close watch on the IMF mission’s visit for review and discussion of climate financing and developments as a result of meeting with the government. Moreover, with the ongoing result season, certain scrips are anticipated to be in the limelight amid expectations of robust results.”

The market commenced on a negative note during the week, extending the losing streak from last week. The following day the moment shifted to a positive trajectory given the commitment from the World Bank of $40 billion investment in Pakistan. In addition to this, the IMF mission will be visiting Pakistan next week to discuss the $1 billion climate financing.

The benchmark KSE-100 index closed at 112,801 points, gaining 716 points (+0.64 per cent week-on-week). Average volumes arrived at 593 million shares (up by 13 per cent WoW), while the average value traded settled at $86 million (down by 12 per cent WoW).

Foreigner selling continued during this week, which clocked in at $5.1 million compared to a net sell of $7.1 million last week. Major selling was witnessed in cement ($2.7 million) followed by commercial banks ($1.4 million). On the local front, buying was reported by insurance companies ($5.8 million) and individuals ($4.4 million).

Sector-wise positive contributions came from cement (549 points), fertilizer (309 points), automobile assembler (81 points), leather & tanneries (65 points), and glass & ceramics (52 points). Scrip-wise positive contributors were FFC (167 points), LUCK (160 points), FCCL (153 points), EFERT (119 points), and MTL (96 points).

The sectors that contributed negatively were commercial banks (198 points), E&Ps (169 points), pharma (155 points), and technology & communication (55 points). Scrip-wise negative contributions came from UBL (216 points), MARI (136 points), ABOT (130 points), MCB (84 points), and HBL (82 points).

According to an analyst at Topline Securities, the KSE-100 index closed the week on a flat note (up by meagre 0.63 per cent), where investors kept a close eye on December quarter result announcements.

Analyst Abdul Basit at JS Research said that during the week, the current account recorded a $420 million deficit for January-2025 after three consecutive months of surplus. This was primarily driven by a 17 per cent year-on-year increase in imports, offsetting a 10 per cent YoY rise in exports. Consequently, the cumulative current account surplus declined to $682 million in 7MFY25.

Meanwhile, repatriation of profits and dividends by foreign investors continues to rise, with $1.3 billion repatriated in 7MFY25, reflecting improved foreign confidence amid a stronger external financing position. Similarly, FDI surged 56 per cent YoY to $1.5 billion.

The International Finance Corporation (IFC) has also announced plans to expand equity investments and infrastructure financing, potentially unlocking up to $2 billion annually over the next decade. The government raised Rs259 billion in the recent T-bill auction, with yields posting a marginal increase of up to 17bps. Despite external debt repayments, SBP reserves remained stable at $11.2 billion, according to latest SBP data.

Moreover, the upbeat financial results also influenced bullish sentiment.