Stocks likely to stay positive on IMF optimism

KARACHI: Stocks closed to new record highs during the outgoing week. The market is expected to keep up with the positive momentum amid developments on a staff-level agreement with the International Monetary Fund (IMF) and the Pakistan government.

“We expect the market to remain positive in the upcoming week,” said a report by Arif Habib Ltd. “The market participants will be closely following developments leading up to a staff-level agreement between the IMF and the government, which is projected to keep the momentum buoyant.”

According to a stock market report of AKD Securities Ltd, the market is expected to remain positive in the coming weeks, with the potential announcement of a staff-level agreement in the near term serving as a key trigger for momentum. “The KSE-100 is anticipated to sustain its upward trajectory, with a target of 165,215 points by December 25, primarily driven by strong earnings in fertilisers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability,” it said.

The KSE-100 index remained jubilant during the week, crossing the 119k level during the intraday on Thursday. The market sentiment was supported by the expectation of a staff-level agreement between Pakistan and the IMF for the first review of the EFF programme, which is a road to the disbursement of the second tranche of $1.1 billion. In addition to this, the IMF shared a draft of the memorandum of economic and financial policies with the government, which signalled progress.

The market closed at the highest-ever level of 118,442 points, depicting a surge of 2,906 points or 2.5 per cent week-on-week. Average volumes arrived at 508 million shares (up 51 per cent WoW), while the average value traded settled at $112 million (up 43 per cent WoW).

Foreigner selling continued during this week and clocked in at $7.96 million compared to a net sell of $2.61 million last week. Major selling was witnessed in commercial banks ($2.9 million) followed by E&P ($2.3 million). On the local front, buying was reported by banks/DFIs ($176.4 million) and other organisations ($1.5 million).

Sector-wise positive contributions came from E&Ps (1,086 points), technology (416 points), power (273 points), OMCs (213 points) and cement (202 points). Scrip-wise positive contributors were MARI (696 points), SYS (328 points), HUBC (251 points), OGDC (186 points) and LUCK (184 points).

The sectors that contributed negatively included fertiliser (105 points), and insurance (6 points). Scrip-wise negative contributions came from EFERT (124 points), UBL (60 points), FATIMA (29 points), COLG (18 points) and HBL (16 points).

Nabeel Haroon, an analyst at Topline Securities, said the gain in the market can be attributed to buying by mutual funds on favourable IMF programme review, the government’s efforts to resolve circular debt, lower electricity prices and rebound in cement prices.

Analyst Abdul Basit at JS Research said Pakistan is also in the process of securing an arrangement under the Resilience and Sustainability Facility (RSF) with the IMF for additional financing to address climate change impacts.

On the external front, the current account recorded a deficit for the second consecutive month, amounting to $12 million in February-2025, primarily due to higher imports offsetting the rise in remittances. Nevertheless, the balance remained in a surplus of $691 million during 8MFY25.

Meanwhile, the government is planning a reduction in the power tariff by up to Rs8/KWh, mainly driven by revisions in IPP contracts. Besides this, the government kept petroleum prices unchanged, offsetting the impact of lower ex-refinery prices while increasing the petroleum development levy (PDL) by Rs10/litre to Rs70/litre.

In the recently held T-bill auction, the government raised Rs392 billion against the target of Rs800 billion, where yields remained majorly flat with a slight increase in 12M yields. SBP reserves remain stable at $11.15 billion.