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KARACHI: Despite mixed trading conditions, the stock market closed the outgoing week in positive territory, buoyed by a rally in the final session. This surge was sparked by the sentencing of the Pakistan Tehrik-i-Insaf founder to 14 years in prison in the controversial £190 million Al-Qadir Trust case.
Investors interpreted this development as a positive sign for the stability of the current coalition government, alleviating political uncertainty.
Arif Habib Ltd (AHL) said the market experienced volatility, primarily driven by political uncertainties and escalating crude oil prices throughout the week. However, on the economic front, positive developments provided some support.
Key economic indicators showed improvement, with the December 2024 current account posting a fifth straight monthly surplus of $582m, bringing the total for 1HFY25 to $1.2bn compared to a deficit of $1.4bn in the same period last year.
In addition, the cut-off yields in the PIB auction dropped by 19-61bps. The UAE also played a supportive role by rolling over $2bn in deposits with the SBP for another year, contributing to the stability of the external account.
Despite these mixed signals, the KSE-100 index gained 2,025 points or 1.8pc to close at 115,272 points week-on-week.
AKD Securities Ltd said banks, power, and pharmaceutical sectors were the primary contributors to the weekly index rally, adding 622, 357, and 320 points, respectively.
Additionally, the power sector’s circular debt decreased by 11pc year-on-year in November 2024, falling to Rs2.38 trillion. This positive trend is expected to continue, improving the energy sector’s cash-flow situation. Moreover, with easing prices of seasonal perishable food items, weekly inflation (SPI) fell to a seven-year low of 1.2pc year-on-year. However, industrial activity remained subdued, with the Large-Scale Manufacturing sector contracted by 1.3pc year-on-year in 5MFY25.
On the forex front, the SBP-held reserves rose by $30m to $11.7bn as of Jan 10.
Other important news in the week were Saudi firm Manara showed investment interest in Reko Diq mine, World Bank pledged $40bn to Pakistan under 10-year framework, urea sales increased by 58pc year-on-year during December 2024 to close CY24 at 6.6m tonnes, petrol price was raised by Rs3.47 and high-speed diesel by Rs2.61, and car sales surged by 51pc year-on-year in 1HFY25.
Market participation also dropped, with average daily traded volume plunged 28.7pc to 558m shares while the value traded rose 1.1pc to $115.8m week-on-week.
Sector-wise, refinery, pharmaceuticals, and power generation and distribution were amongst the top performers, up 9.6pc, 8.1pc and 4.2pc week-on-week. On the other hand, jute, leasing companies and sugar sectors reported a decline of 6.4pc, 3.8pc and 2.6pc, respectively.
Flow-wise, foreigners and mutual funds recorded major net selling with a net sell of $8.7 and $7m, respectively. On the other hand, individuals and companies absorbed most of the selling with a net buy of $12.8 and $8.5m, respectively.
Sector-wise positive contributions came from commercial banks (619 points), power generation (357 points), pharmaceutical (320 points), cement (199 points) and technology and communication (195 points). Meanwhile, the sector that contributed negatively was sugar (23 points). Scrip-wise positive contributors were United Bank (427 points), Hub Power (360 points), Mari Petroleum (120 points), The Searle (100 points), and Lucky Cement (97 points). Meanwhile, scrip-wise negative contributions came from OGDC (64 points), Pakistan Petroleum (53 points), Pakistan Aluminium Beverage Cans (31 points), Askari Bank (30 points), and JDW Sugar (23 points).
According to AKD Securities Ltd, the market will likely maintain its positive trajectory, driven by an anticipated shift of funds from fixed income to equities amid falling fixed income yields. With easing inflation, the upcoming State Bank of Pakistan’s Monetary Policy Committee meeting, scheduled for Jan 27, will remain a key focus.
Published in Dawn, January 19th, 2025
