Earnings outlook drives PSX above 117,500

Dawood Hercules, Engro restructuring sparks optimism as KSE-100 index gains 467 points

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KARACHI:

KARACHI

Pakistan Stock Exchange (PSX) on Friday closed on a bullish note as the KSE-100 index rose past 117,500 points, fueled by strong earnings projections for the banking and fertiliser sectors.

Investors reacted positively to an expected robust payout in banking stocks, a 58% year-on-year (YoY) surge in December urea sales, and optimism about a potential cut in the State Bank of Pakistan's (SBP) policy rate.

The index posted a solid 5.6% week-on-week gain, carrying forward the 2024 momentum into 2025.

"Stocks closed bullish, led by the banking and fertiliser sectors, on a strong earnings outlook," said Arif Habib Corp Managing Director Ahsan Mehanti.

Expected strong payout in the banking sector, upbeat data of urea sales that surged 58% YoY in December 2024 and projections of policy rate cut played the role of catalysts in bullish close at the PSX, he said.

At the end of trading, the benchmark KSE-100 index posted a surge of 467.33 points, or 0.40%, and settled at 117,586.98.

Arif Habib Limited (AHL) reported a robust 5.6% week-on-week (WoW) gain for the KSE-100 index, carrying the bullish momentum from 2024 into 2025.

On Friday, 47 stocks advanced, while 52 declined. Engro Fertilisers (+9.46%), Fauji Fertiliser Company (+2.59%), and Dawood Hercules Corporation (+6.19%) were the top contributors to index gains, while Lucky Cement (-3.75%), Systems Limited (-3.24%), and Pakistan Petroleum (-2.64%) acted as major drags.

The report also highlighted significant corporate developments involving Dawood Hercules and Engro Corporation. Both companies are finalising their restructuring process under the Scheme of Arrangement, with regulatory and court approvals in place.

Dawood Hercules will be split into two separate legal entities, with one entity, including Dawood Hercules' 40% stake in Engro, rebranded as Engro Holdings Limited. Engro will become an unlisted subsidiary of Engro Holdings.

According to the approved swap ratio, Engro shareholders will receive 2.24 shares of Engro Holdings for every Engro share. This restructuring will increase Engro Holdings' share count by 723 million, bringing the total to 1,204 million shares.

Looking ahead, AHL maintains a positive market outlook for January, with key support for the KSE-100 index at 115,500.

Topline Securities wrote in its research report that the KSE-100 opened on a negative note, largely led by pressure in the cement sector, as the index declined to the intra-day low of 1,540 points.

In the cement sector, it said, there was a dispute among manufacturers over increase in market share and change in geographical sales to fetch higher retention prices where some players were reportedly encroaching on the volumes of others, creating unease in the sector.

However, in the second half of the trading session, investors came in with access to available liquidity to buy at dips. As a result, the index recovered and closed at 117,587, up 0.4%.

Top positive contribution to the index came from the fertiliser sector as Engro Fertilisers, Fauji Fertiliser Company, Dawood Hercules and Engro cumulatively contributed 911 points. The interest in the fertiliser sector was on account of expectations of an increase in dispatch numbers by 53% month-on-month for December 2024, Topline added.

Overall trading volumes were recorded at 936 million shares compared with Thursday's tally of slightly over 1 billion. The value of shares traded during the day was Rs39.6 billion.

Shares of 456 companies were traded. Of these, 167 stocks closed higher, 246 fell and 43 remained unchanged.

WorldCall Telecom was the volume leader with trading in 73.2 million shares, losing Rs0.09 to close at Rs1.70. It was followed by Cnergyico PK with 57.3 million shares, losing Rs0.01 to close at Rs7.55 and Fauji Cement with 54.4 million shares, losing Rs2.24 to close at Rs34.83.

During the day, foreign investors bought shares worth Rs299.7 million, according to the NCCPL.