PSX set for further gains amid strong corporate earnings, easing inflation data: report

The stock market is expected to maintain a positive trend in the short term, with momentum largely influenced by upcoming corporate earnings and January 2025 inflation data, according to a report by AKD Securities.  

The market remained volatile throughout the week ended on January 31, 2025, largely influenced by corporate earnings announcements. During the week, the benchmark KSE-100 index shed 625 points or 0.54%, closing at 114,256 points. Fertilizer stocks weighed heavily on the index, dragging it down by 742 points WoW, following FFC’s lower-than-expected profitability. 

However, this was partially offset by higher-than-expected final dividends from banks, which contributed 612 points to the index and cushioned the overall decline. 

The market participation also dropped to 15-week low, with an average daily traded volume of 498 million shares, down 29% WoW. 

The week began with SBP cutting the policy rate by 100 bps to 12% amid a continued disinflationary trend. Additionally, SBP revised its inflation forecast for FY25 to 5.5%-7.5%, significantly lower than the earlier projection of 11.5%-13.5%. 

The central bank also changed its current account balance forecast to a range of a 0.5% surplus to a 0.5% deficit of GDP in FY25, compared to the previous estimate of a 0%-1% deficit. Meanwhile, ahead of the IMF review, authorities met another condition by notifying a gas price increase for captive power producers to PkR3,500 per mmbtu.

The SBP-held reserves declined by $76 million WoW to $11.4 billion as of January 24, 2025. The domestic currency weakened marginally against the greenback, depreciating 0.07% WoW to close at PkR 278.95 against the US dollar. 

Among sectoral performances, Textile Weaving, Automobile Assemblers, and Banks were the top gainers, rising 4.1%, 3.5%, and 1.5% week-on-week, respectively. In contrast, Oil Marketing Companies (OMCs), Engineering, and Refinery sectors recorded losses of 5.8%, 5.3%, and 3.0% week-on-week.

In terms of market flows, Banks and Foreign Investors led net selling, offloading shares worth $5.7 million and $4.7 million, respectively. Meanwhile, Companies, Other Organizations, and Individual Investors absorbed most of the selling with net purchases of $5.6 million, $2.6 million, and $2.3 million, respectively.

At the company level, the top performers of the week included Atlas Honda (ATLH), up 16.1%, National Bank of Pakistan (NBP), gaining 11.9%, Kohinoor Textile Mills (KTML), up 9.1%, Askari Bank (AKBL), rising 7.9%, and Bank AL Habib (BAHL), up 7.4%. The worst performers were International Steels Limited (ISL), which fell 8.1%, Sui Northern Gas Pipelines (SNGP), down 7%, Unity Foods (UNITY), losing 6.7%, AGP Limited, down 6.4%, and Kosmopolitan Investments (KOSM), which declined 6.1% week-on-week.

According to the brokerage report, the benchmark KSE-100 Index is anticipated to sustain its upward trajectory, with projections reaching 165,215 points by December 2025. 

This outlook is driven by strong profitability in the fertilizer sector, higher sustainable returns for banks, and improved cash flows for exploration & production (E&P) firms and oil marketing companies (OMCs), supported by declining interest rates.