Stocks likely to stay positive on Pakistan-IMF talks

KARACHI: Pakistan stocks closed positive during the outgoing week. The market is expected to stay positive regarding the outcome of the Pakistan and International Monetary Fund (IMF) talks in the coming week.

“We anticipate the market to be positive in the coming week, given the investors will be expecting positive developments related to government-IMF talks,” said a market review report by brokerage Arif Habib Ltd.

The KSE-100 is currently trading at a PER of 6.3x (2025) compared to its 10-year average of 8.0x, offering a dividend yield of ~8.2 per cent compared to its 10-year average of ~6.5 per cent.

At the start of the week, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) decided to maintain interest rates at 12 per cent, contrary to expectations of 50bps cut, culminating in a negative impact on the market initially. Towards mid-week, the momentum shifted to the green zone on the anticipation of potential development related to settlement of energy circular debt.

Furthermore, the IMF has agreed to cut the FBR’s tax collection target, leading to further improvement in sentiment.

The KSE-100 index closed at 115,536 points, reflecting a gain of 1,137 points or +0.99 per cent WoW. Average volumes arrived at 337 million shares (up 16 per cent WoW), while the average value traded settled at $79 million (up 21.1 per cent WoW).

Foreigner selling continued during this week, clocked in at $2.61 million compared to a net sell of $5.3 million last week. Major selling was witnessed in commercial banks ($2.8 million) followed by E&P ($1.2 million). On the local front, buying was reported by banks/DFIs ($110.9 million) and other organizations ($1.7 million).

Sector-wise positive contributions came from E&Ps (234 points), OMCs (194 points), banks (179 points), cement (118 points), and fertilizer (110 points). Scrip-wise positive contributors were MARI (303 points), PSO (174 points), HBL (65 points), EFERT (53 points), and DGKC (51 points).

The sectors that contributed negatively were engineering (46 points), glass & ceramics (45 points), leather & tanneries (37 points), and automobile assembler (36 points). Scrip-wise negative contributions came from MTL (52 points), SRVI (37 points), PPL (34 points), HMB (28 points) and ISL (28 points).

Analyst Nabeel Haroon at Topline Securities said the KSE 100 index increased 1.0 per cent on WoW basis, this gain can be accredited to debt rollover of $1 billion by China and positive news flow from talks with IMF team for first review of $7 billion EFF programme.

Other major developments during the outgoing week were; Pakistan workers remittances for February 2025 clocking in at $3.1 billion (up 39 per cent YoY and 4.0 per cent MoM) and Pakistan car sales (as reported by PAMA) for February 2025 settled at 12,084 units.

Furthermore, the SBP raised Rs15.8 billion against the target of Rs350 billion, with cut-off for 5Y remained unchanged while 10Y declined by a meagre 1bp. Meanwhile, SBP reserves decreased by $152 million WoW, reaching a total of $11.1 billion.

Other major news: Engro completed divestment of Eximp Agriproducts for Rs2.4 billion; Haleon Pakistan shipped first Centrum consignment to Kenya; OGDCL revived Rajian-11 heavy oil well, restoring production to 1,000 BPD; and the SBP approved Silk Bank’s merger with United Bank Limited.