KARACHI: Pakistan stocks closed slightly lower during the outgoing week; however, the market is expected to recover next week amid strong valuations. Investors will closely monitor the Monetary Policy Committee (MPC) meeting on Monday.
“Market participants are expected to closely monitor the MPC meeting on January 27, 2025, which will mark the first MPC meeting of the calendar year,” said brokerage Arif Habib Ltd. “We project a 100 basis points (bps) cut in the monetary policy rate, bringing it down to 12 per cent, a level that was last seen in March 2022. Moreover, many financial results are expected to be announced in the upcoming week, which could lead to activity in specific stocks.”
The market commenced on a positive note amid expectations of further rate cuts in the upcoming MPC meeting. However, brief profit-taking during the week reversed the momentum.
The KSE-100 index closed at 114,880 points, losing 392 points (down 0.34 per cent) week-on-week. Average trading volumes stood at 698 million shares (up 25.1 per cent week-on-week), while the average value traded settled at $123.9 million (up 7.0 per cent week-on-week).
Foreign buying was recorded at $5.6 million compared to a net sell of $9.7 million last week. Major buying was observed in the cement sector ($3.9 million), followed by exploration and production (E&P) companies ($1.7 million). On the local front, selling was reported by banks ($14.1 million) and non-banking financial companies (NBFCs) ($0.1 million).
Sector-wise, negative contributions came from oil and gas exploration companies (1,225 points), power (194 points), oil and gas marketing companies (114 points), automobile assemblers (81 points) and engineering (33 points). Scrip-wise, the biggest negative contributors were MARI (-788 points), OGDC (-198 points), PPL (-198 points), HUBC (-151 points) and UBL (-123 points).
On the positive side, the fertiliser sector contributed 638 points, cement 165 points, pharmaceuticals 74 points, technology 54 points, and chemicals 43 points. Key positive contributors included FFC (582 points), FCCL (146 points), MEBL (112 points), SYS (76 points) and MCB (46 points).
Analyst Nabeel Haroon at Topline Securities attributed the market’s negative closing to discussions on restricting investment in the stock market by non-tax filers and heavy selling by the banking sector during the week.
Wadee Zaman, an analyst at JS Research, said that the KSE-100 index experienced mixed trends during the week. Foreign direct investment (FDI) for December 2024 recorded a net inflow of $170 million, reflecting a 33 per cent year-on-year decline. However, it improved by 20 per cent year-on-year during the first half of FY25.
During the week, the finance minister announced that Pakistan plans to launch Panda bonds worth $200 million to $250 million by the end of the current fiscal year.
In other economic news, the International Monetary Fund (IMF) revised Pakistan’s GDP growth forecast for FY25 from 3.2 per cent to 3.0 per cent. Textile exports were recorded at $9.1 billion, up 9.7 per cent year-on-year.
Pakistan also finalised terms for a $1 billion loan from two Middle Eastern banks, providing further support to the country’s external financing needs.
In the recent T-bill auction, the government raised Rs326 billion against a target of Rs350 billion, with yields declining between 20-41bps across different tenors, further strengthening the case for a rate cut.
The IMF has proposed aligning gas tariffs for captive power plants (CPPs) with re-gasified liquefied natural gas (RLNG) prices effective February 2024. Meanwhile, the State Bank of Pakistan’s reserves declined by $276 million during the week to $11.45 billion, primarily due to debt repayments.
During the week, oil prices witnessed a 3.0 per cent week-on-week decline amid concerns over US President Trump’s plan to boost domestic oil production.
