Stock market posts 0.19pc gain for the third week

KARACHI: Pakistan Stock Exchange (PSX) closed the third week in a row on a positive note, with the benchmark KSE-100 Index gaining 122.74 points (+0.19 percent) to close at 64,637.63 points.
The optimism remained high as the International Monetary Fund (IMF) executive board on January 11 (Thursday) approved $700 million for the country, which is expected to provide crucial economic stabilization. Moreover, growth in the country’s foreign currency reserves by $36 million due to a surge in commercial banks’ reserves, notable decline in cut-off yields and a stable rupee provided critical support to the stock market. The rupee closed at 280.36 against the dollar, appreciating 0.37 percent week-on-week.
The six-month interbank rate fell to its lowest level in 10 months on Thursday. The six-month Karachi interbank offered rate (KIBOR), which serves as a benchmark for corporate lending, dropped to 20.98 percent, the lowest since March 2023. The decline in the KIBOR followed a sharp fall in the cut-off yields of treasury bills at an auction on Wednesday, where the government raised Rs284 billion, much more than the original target of Rs100 billion. The yields on all tenors – three, six and 12 months – fell below 21 percent, indicating a significant deviation of over 100 basis points from the SBP’s current policy rate of 22 percent. There was a notable decrease in the cut-off yields, which varied from 44 basis points (bps) to 59 bps.
However, the weekly inflation registered an increase of 1.36 percent and ongoing pre-election anxieties persist, which raised some concerns.
The benchmark index moved up to 64,637.63 points from 64,514.89 points during the week. The market maintained a range-bound trajectory throughout the week. Average volumes decreased by 18.5 percent week-on-week to 560 million shares while the average value traded went down by 18.1 percent to settle at $57 million.
Foreign buying was witnessed during the week, clocking in at $1.9 million compared to a net sell of $3.1 million last week. Major buying was witnessed in fertilizer ($0.85 million) and other sectors ($0.8 million). On the local front, selling was reported by banks / DFIs ($4.9 million) followed by broker proprietary trading ($3.7 million).
The sectors moving the index towards north included oil and gas exploration companies (242 points), fertilizer (214 points), automobile assemblers (56 points), miscellaneous (38 points), and engineering (9 points). Top companies adding points to the index remained ENGRO (111 points), PPL (106 points), MARI (103 points), EFERT (75 points), and INDU (70 points).
The sectors moving the index towards south included commercial banks (173 points), cement (88 points), technology and communication (84 points), oil and gas marketing companies (38 points), and refinery (27 points). Top companies depriving the index of points included UBL (58 points), MEBL (49 points), TRG (35 points), SYS (32 points), and DGKC (25 points).
“We expect the benchmark index to remain positive in the coming week,” said brokerage Arif Habib Ltd in a weekly note. “The prime minister has written a letter to rollover a $2 billion loan to the UAE, which is scheduled to mature in the upcoming week,” the brokerage said.
A successful rollover is expected to enhance Pakistan’s foreign reserve position and instill confidence among investors, it further said. Moreover, the scrips are trading at attractive valuations, and are expected to further boost positive sentiment at the index, it added. – TLTP