Despite mixed trend, PSX gains 716 points

Pakistan Stock Exchange (PSX) experienced a mixed trend during the outgoing week as it commenced trading on a negative note before gaining momentum following the World Bank's commitment to investing $40 billion in Pakistan.

Positive investor sentiment was further fueled by expectations surrounding the upcoming International Monetary Fund (IMF) mission, which was set to discuss a $1 billion climate financing package. Meanwhile, corporate earnings provided additional support to the market.

On a day-on-day basis, the PSX on Monday closed lower as investor interest remained subdued amid concerns over foreign fund outflows, ongoing consolidation during the earnings season and uncertainty about tax reforms ahead of the IMF review. At the end of trading, the benchmark KSE-100 index recorded a decrease of 342 points.

On Tuesday, the bourse finished trading on a highly bullish note as increased investor interest in lucrative stocks sent the index soaring by 1,346 points. On the third trading day, the positive momentum continued, with the benchmark index gaining 254 points. The rally was driven by stronger-than-anticipated corporate earnings, which lifted investor confidence and encouraged fresh buying across various sectors.

On Thursday, the PSX extended its buying spree on the back of robust corporate earnings, which helped KSE-100 notch up gains of 397 points. On the last trading day, the market endured a volatile session, registering a sharp decline of 938 points as profit-taking in cement and banking stocks erased earlier gains. The KSE-100 index closed at 112,801, gaining 716 points, or 0.64% week-on-week (WoW).

Arif Habib Limited (AHL), in its weekly review, said the stock market commenced the outgoing week on a negative note, extending the losing streak from last week. The following day, the momentum shifted to a positive trajectory given the World Bank commitment to investing $40 billion in Pakistan. In addition, AHL said, an IMF mission would be visiting Pakistan next week to discuss $1 billion worth of climate financing. Moreover, upbeat financial results also influenced bullish sentiment. On the economic front, the current account balance recorded a deficit of $420 million for January 2025, breaking a three-month streak of C/A surplus.

Sector-wise, positive contribution came from cement (549 points), fertiliser (309 points), automobile assemblers (81 points), leather and tanneries (65 points) and glass & ceramics (52 points). Meanwhile, the sectors that contributed negatively were commercial banks (198 points), exploration and production (169 points), pharmaceutical (155 points) and technology & communication (55 points).

Stock-wise, positive contributors were Fauji Fertiliser Company (167 points), Lucky Cement (160 points), Fauji Cement (153 points), Engro Fertilisers (119 points) and Millat Tractors (96 points). On the other hand, negative contribution came from UBL (216 points), Mari Petroleum (136 points), Abbott Laboratories (130 points), MCB Bank (84 points) and HBL (82 points), AHL said.

Foreigners' selling continued during the week under review, which came in at $5.1 million compared to net selling of $7.1 million in the previous week. Major selling was witnessed in cement ($2.7 million), followed by commercial banks ($1.4 million).

Average trading volumes arrived at 593 million shares, up 13% WoW, while average traded value settled at $86 million, down 12% WoW, AHL added.

JS Global analyst Abdul Basit wrote in his report that the KSE-100 index remained positive during the outgoing week, gaining 0.6% WoW. He said repatriation of profits and dividends by foreign investors continued to rise, with $1.3 billion being repatriated in seven months of FY25, reflecting improved investor confidence amid a stronger external financing position.

Similarly, foreign direct investment surged 56% year-on-year to $1.5 billion. The International Finance Corporation (IFC) announced plans to expand equity investment and infrastructure financing, potentially unlocking up to $2 billion annually over the next decade, he said. In the recent T-bills auction, the government raised Rs259 billion, with yields marginally increasing up to 17 basis points. Despite external debt repayments, the State Bank's reserves remained stable at $11.2 billion, the JS analyst added.