KARACHI: Mixed news flow kept the equities market highly volatile, pushing the benchmark KSE 100 index close the outgoing week in the red amid uncertainty about the country’s economic and political outlook.

The investor’s nervousness stemmed particularly after Donald Trump’s inauguration as the 47th president of the United States and a slew of executive orders issued by him, including the imposition of import duties and energy reforms that would have widespread consequences on the global trade equation.

The Pakistan Stock Exchange on Monday, ahead of Mr Trump’s oath-taking, staged a rally, but in the subsequent two sessions turned bearish on selling pressure caused by the proposed tax measures, including restriction non-filers and uncertainty about the outcome of talks between the government and the PTI.

Arif Habib Ltd (AHL) said the market commenced positively amid expectation of further rate cuts in the upcoming State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) meeting next week. However, a brief profit-taking reversed the momentum.

The international oil price witnessed a 3pc week-on-week decline amid concerns over Mr Trump’s plan to boost US oil production. Furthermore, Pakistan has agreed to the $1bn loan terms with two Middle Eastern banks at a high rate of 6-7pc, which would further increase the debt servicing burden.

The expectations of a sixth straight rate cut were strengthened after the government raised Rs326bn against a target of Rs350bn at a T-bill auction on Wednesday. The cut-off yields were slashed by up to 41bps for different tenors at 11.59pc for 3-month, 11.40pc for 6-month, and 11.39pc for 12-month T-bills.

Another positive trigger was the 9.7pc year-on-year increase in textile exports during 1HFY25, settling at $9.1bn. Moreover, the power generation increased by 1pc in December 2024.

As a result, the KSE-100 index closed at 114,880 points, losing 392 points or 0.34pc week-on-week.

AKD Securities Ltd noted that the market stayed marginally subdued due to the proposed tax amendment bill with increased curbs on non-filers, barring them from purchasing securities, investing in mutual funds and properties, and even suspending their bank accounts.

Regarding economic outlook, the International Monetary Fund revised down Pakistan’s GDP growth forecast to 3pc from 3.2pc for FY25.

On the external front, SBP’s forex reserves declined by $276m week-on-week, settling at $11.5bn. Meanwhile, the rupee weakened marginally against the US dollar, losing 0.015pc week-on-week to close at Rs278.75.

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). Meanwhile, the sectors that contributed positively were fertiliser (638 points), cement (165 points), pharmaceuticals (74 points), technology (54 points), and chemical (43 points).

Scrip-wise negative contributors were Mari Energies (788 points), Oil and Gas Development Company (198 points), Pakistan Petroleum (198 points), Hub Power (151 points), and United Bank (123 points). Whereas scrip-wise positive contributions came from Fauji Fertiliser (582 points), Fauji Cement (146 points), Meezan Bank (112 points), Systems (76 points), and MCB Bank (46 points).

Foreigners’ buying clocked in at $5.6m compared to a net sell of $9.7m last week. Major buying was witnessed in cement ($3.9m), followed by E&P’s ($1.7m). On the local front, selling was reported by banks ($14.1m) and NBFC ($0.1m). Average trading volume rose 25.1pc to 698m shares while the value traded jumped 7pc to $123.9m week-on-week.

According to AKD Securities, the market will 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 MPC meeting on Monday will remain a key focus. Over the medium term, the KSE-100 is anticipated to sustain its upward momentum through CY25.

Published in Dawn, January 26th, 2025

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

IMF scrutiny
Updated 11 Feb, 2025

IMF scrutiny

Strengthening foundations of the economic superstructure will help make the economy competitive and boost growth.
Shadow voices
11 Feb, 2025

Shadow voices

OVER the weekend, another ‘open letter’ addressed to the army chief and attributed to former prime minister ...
Paradise at a premium
11 Feb, 2025

Paradise at a premium

PAKISTAN’S recent triumph at the New York Travel and Adventure Show 2025, winning the Best Partner Pavilion Award,...
A positive note
Updated 10 Feb, 2025

A positive note

With govt unable to press growth accelerator without upending fragile recovery, sufferings of low-middle-income households are unlikely to disappear soon.
Justice for all
10 Feb, 2025

Justice for all

ALONG with his domestic agenda, Donald Trump is busy ripping to shreds the post-World War II ‘rules-based...
Held back
10 Feb, 2025

Held back

IT is a crying shame how women are conspicuously absent from Pakistan’s civil services. Despite comprising half ...