KARACHI: The market heads into next week with a constructive outlook, backed by steady foreign inflows expectations, easing political uncertainty and improved external support.
Analysts at AKD Research project continued momentum in the KSE-100, helped by the IMF Executive Board’s approval of the second review, falling fixed income yields and rising global credit confidence in Pakistan. They expect sentiment to strengthen further as improved ties with the US and Saudi Arabia raise the prospect of new foreign portfolio and direct investment.
The benchmark index gained 408 points, or 0.24 per cent, over the week to close at 167,086 points on Friday. According to AKD Research, mid-week swings settled as the government confirmed Field Marshal Asim Munir as chief of defence forces and Saudi Arabia extended its $3 billion deposit at the State Bank of Pakistan (SBP).
Trading activity, however, slowed, with average volumes falling 22 per cent week-on-week (WoW) to 863 million shares.
On the external side, the trade deficit widened 33 per cent year-on-year (YoY) to $2.9 billion in November as imports grew 5.0 per cent and exports fell 15 per cent. Headline inflation matched expectations at 6.1 per cent for the month, while government debt fell by Rs908 billion in the fiscal year to date.
Cement and exploration and production-led sector gains, adding 535 points and 351 points respectively, driven by stronger local cement dispatches, foreign expansion plans by Lucky Cement, progress on LNG diversion and Turkish interest in offshore blocks.
The State Bank’s reserves edged up $14 million to $14.6 billion. The rupee firmed 0.04 per cent YoY to close at 280.42 per dollar.
Key developments included weaker petroleum sales, a Rs143 billion tax shortfall for November, a forty per cent jump in refinery upliftment, expectations of strong wheat sowing in Punjab and a rise in business confidence to 22 per cent as reported by the OICCI.
On performance tables, investment banks and companies, refineries and cement outperformed, rising 7.2, 5.4 and 3.4 per cent respectively, while automobile parts, textile spinning and fertiliser declined. Individuals and mutual funds led buying with inflows of $17.8 million and $12 million, while insurance firms and foreign investors sold $32.4 million and $9.7 million. The best-performing stocks included BNWM, PTC, SRVI, PIOC and TRG, while THALL, AICL, HUMNL, HGFA and FHAM lagged.
Syed Danyal Hussain of JS Research noted the market stayed range-bound despite closing the week slightly higher, supported by a 21 per cent rise in average daily turnover. He pointed to November inflation at 6.1 per cent, a widening trade deficit and continued tax shortfalls. He added that the government aims to finalise an action plan for fifteen key IMF recommendations by end December and highlighted Saudi Arabia’s decision to extend its $3 billion deposit to 2026. He also flagged rising domestic debt, which reached Rs45.49 trillion by October, and confirmed that final bidding for the PIA privatisation is set for December 23.
Nabeel Haroon at Topline Securities said the week’s gain reflected the clarity created by the appointment of Field Marshal Syed Asim Munir as chief of defence forces and the Saudi extension of its deposit. He added that November inflation eased slightly to 6.15 per cent, the trade deficit reached $2.86 billion and average weekly volumes stood at 680 million shares with a traded value of Rs40.2 billion.
