Stock market outlook remains positive ahead of MPC meeting and IMF review: report

Pakistan’s stock market outlook remains positive, with investors closely watching the upcoming Monetary Policy Committee (MPC) meeting scheduled for March 10, 2025, and any developments related to the IMF review, according to a report by brokerage firm AKD Securities.

Market remained volatile throughout the week, with the KSE-100 index closing at 113,252 points, up 0.4% or 451 points week-over-week (WoW). The week started on a positive note, buoyed by initiation of talks for $1.2-1.5 billion climate financing from the IMF, government proposals for energy tariff cuts and resolving circular debt, and strong corporate results, particularly from the banking and cement sector. 

However, the momentum faded during the latter half of the week due to absence of fresh triggers. On the climate financing front, authorities are discussing the implementation of carbon levy, meanwhile, the IMF has objected to the exemption of sales tax on local EV component sales. 

On the macro front, Pakistan signed several accords and committed to boosting bilateral trade with Azerbaijan and Uzbekistan during the Prime Minister’s visits to respective countries and signed agreements with UAE during the visit of Abu Dhabi’s Crown Prince. 

Additionally, inflation is expected to ease further to a nine-year low of 1.9%YoY in February 2025, driven primarily by falling food and energy tariffs. 

On the external front, SBP’s foreign exchange reserves rose by $21 million WoW, settling at $11.2 billion. Meanwhile, the domestic currency weakened marginally against the greenback, depreciating by 0.04% WoW to close at PkR279.67 against the US dollar. 

Market participation also remained subdued during the week, with average daily traded volume falling by 17% WoW, averaging 492 million shares from 593 million shares in the same period last year. 

Key developments during the week included the government’s collection of PKR 23 billion from 16 banks under the windfall tax, an agreement between Pakistan and Vietnam to set a $3 billion annual trade target, and the State Bank of Pakistan’s (SBP) invitation for bids on a PKR 200 billion PFL buyback auction. 

Pakistan and Iran reached an agreement to increase bilateral trade to $10 billion. The Petroleum Division proposed a PKR 392.5 billion Public Sector Development Program (PSDP) for in-house projects.

Among sectoral performances, Glass & Ceramics, Real Estate Investment Trusts, and Commercial Banks led the gains, rising by 9.6%, 2.4%, and 2.1% week-on-week (WoW), respectively. Conversely, the Jute, Property, and Leasing sectors saw declines of 8.9%, 6.4%, and 5.8% WoW.

In terms of market flows, Individuals and Foreign Investors recorded major net selling of $18.5 million and $6 million, respectively, while Mutual Funds absorbed most of the outflows with a net purchase of $31.6 million.

On a company level, the top gainers of the week were TGL, which surged 21.2% WoW, followed by PKGP (15.7%), MLCF (13.3%), NATF (12.9%), and AGP (11.6%). The worst performers included MEHT, down 16.9% WoW, NCPL (14.6%), BIPL (11.5%), SEARL (8.9%), and AKBL (8.5%).

According to brokerage report, the KSE-100 is anticipated to sustain its upward trajectory over the medium term, with a target of 165,215 points by December 2025, primarily driven by strong earnings in fertilizers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.