The Pakistan Stock Market is expected to maintain its positive momentum, driven by an anticipated lower inflation reading for August 2024, the upcoming Monetary Policy Committee (MPC) decision, and developments on the International Monetary Fund (IMF) deal, according to a note by brokerage firm AKD Research.
The KSE-100 index displayed signs of weakness earlier in the week, attributed to Pakistan’s exclusion from the IMF’s executive board meeting agenda, resulting in a 0.4% decline over the week, closing at 78,488 points.
Despite this, the government has requested Saudi Arabia to increase its lending by $1.5 billion, in addition to seeking $4 billion from Middle Eastern commercial banks to address the external financing gap.
Positive sentiment was bolstered by Moody’s upgrade of Pakistan’s debt rating to Caa2 from Caa3, leading to increased market participation, the note added.
The average daily traded volume surged by 28.6% week-on-week, reaching 602.12 million shares compared to 468.06 million shares in the previous week.
However, the Federal Board of Revenue (FBR) is likely to miss its August 2024 collection target by PKR 50 billion, according to news reports.
The brokerage firm noted that on the macroeconomic front, the State Bank of Pakistan (SBP) reported an increase in foreign exchange reserves by $112 million, bringing the total to $9.4 billion as of August 23.
Meanwhile, secondary market yields saw a marginal rise, with the 3-month yield at 18.05% and the 1-year yield at 16.95%.
The Pakistani Rupee remained largely stable against the US Dollar, closing the week at 278.54 per Us dollar.
Sector-wise, the top performers included Jute, Transport, Exchange Traded Funds, Food & Personal Care Products, and Textile Weaving, with gains of 47.8%, 5.9%, 5.0%, 2.6%, and 2.4% week-on-week, respectively.
Conversely, Textile Spinning, Leather & Tanneries, Vanaspati & Allied Products, Real Estate Investment Trust, and Paper & Board sectors experienced declines of 11.0%, 8.8%, 6.0%, 4.3%, and 4.0% week-on-week, respectively.
In terms of market flows, Banks and DFIs were net sellers with a sell-off of $3.85 million, while individual investors absorbed the majority of the selling with net purchases of $5.84 million.
Among companies, National Bank of Pakistan (NBP) was the top performer, up 16.0% week-on-week, followed by Colgate-Palmolive (COLG), GlaxoSmithKline (GLAXO), Millat Tractors (MTL), and Mari Petroleum (MARI). On the downside, Abbott Laboratories (ABOT), Avanceon (AVN), Service Industries (SRVI), Sindh Modaraba (SML), and Pakistan Stock Exchange (PSX) were the major laggards.
AKD Research anticipates continued positive market momentum, with inflation trends, MPC outcomes, and IMF-related developments being key drivers.
Sectors benefiting from monetary easing and structural reforms are expected to gain attention, while high dividend-yielding stocks remain favorable amid declining fixed income yields.
