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Market Commentary
Pakistan Weekly Market Update: The week commenced with slight market pressure due to Pakistan’s absence from the IMF Executive Board’s schedule for August 2024, leading to concerns about the disbursement of the expected tranche. However, optimism returned midweek when the Finance Minister announced progress in negotiations with the IMF, suggesting the possibility of securing approval from the IMF Executive Board by September 2024. This positive sentiment was further reinforced by a T-bill auction later in the week, where cutoff yields decreased by 74-148 basis points across all tenors. This drop indicated market expectations of a potential rate cut in the upcoming monetary policy meeting in September 2024. Additionally, the State Bank of Pakistan’s (SBP) reserves saw a modest increase of USD 19 million week-on-week, reaching USD 9.3 billion. The Pakistani Rupee also remained stable against the USD at 278.5. Consequently, the market closed at 78,801 points, reflecting an increase of 756 points or 0.97% week-on-week.
Sector-wise Performance
Positive contributions to the market were driven by the following sectors:
- Commercial Banks: 369 points
- Fertilizer: 177 points
- Cement: 134 points
- Leather: 79 points
- Refinery: 47 points
On the other hand, sectors that contributed negatively included:
- Automobile Assembler: -40 points
- Food & Personal Care Products: -34 points
- Technology: -20 points
- Miscellaneous: -11 points
- Exploration & Production (E&P): -10 points
Top Scrip-wise Contributors:
- Positive: FFC (197 points), NBP (164 points), UBL (123 points), SRVI (79 points), OGDC (75 points)
- Negative: MARI (-108 points), HBL (-65 points), MTL (-43 points), SYS (-41 points), ENGRO (-35 points)
Foreign Activity
Pakistan Weekly Market Update: Foreign selling was observed during the week, totaling USD 0.62 million, a sharp contrast to the net buy of USD 5.26 million in the previous week. Major selling was concentrated in the Fertilizer sector (USD 0.92 million) and Other Sectors (USD 0.92 million). On the local front, buying activity was led by Mutual Funds (USD 3.5 million) and Banks / DFIs (USD 3.5 million). Average trading volumes increased by 4.6% week-on-week to 578 million shares, while the average value traded declined by 25.2% week-on-week to USD 56 million.
Other Major News:
- Banking sector deposits increased by 19% to Rs30.6 trillion in July.
- Car financing in Pakistan declined for the 25th consecutive month.
- Roshan Digital Account (RDA) attracted USD 161 million in July.
- Large-scale manufacturing output contracted in FY24.
Outlook and Recommendation
Looking ahead, we expect the market to maintain its positive momentum in the coming week, particularly if there are favorable developments related to the IMF. Additionally, as the earnings season progresses, select stocks are likely to attract attention, driven by expectations of strong financial results.
Our Preferred Stocks:
- OGDC
- MCB
- UBL
- MEBL
- FABL
- HBL
- LUCK
- MLCF
- FCCL
- FFC
- HUBC
- PSO
- SYS
The KSE-100 Index is currently trading at a price-to-earnings ratio (PER) of 4.1x for 2025, compared to its 5-year average of 5.9x. Additionally, it offers a dividend yield of approximately 10.3%, higher than its 5-year average of around 8.2%.
