Pakistan’s stock market (PSX) continued its record-breaking rally this week, driven by strengthened prospects of securing a deal with the International Monetary Fund (IMF). Despite the shortened trading week, the KSE-100 index surged by 2,104 points, closing at an impressive 78,810, marking a 2.7% increase in USD terms.

MARKET PERFORMANCE HIGHLIGHTS:

  • Trading Range: The KSE-100 index fluctuated significantly, trading within a range of 3,163 points. It peaked at 80,060 points (+3,353) and hit a low of 76,897 points (+190).
  • Trading Volume: The Pakistan Stock Exchange (PSX) saw an average traded volume of 461.99 million shares, valued at Rs20.58 billion. This reflects a 12.8% week-on-week (WoW) increase in the number of shares traded and a 21.8% WoW rise in traded value.
  • Market Capitalization: PSX’s market capitalization climbed by $830.4 million, reaching $37.38 billion, a 2.3% increase. In PKR terms, it stood at Rs10.41 trillion, having briefly crossed an all-time high of Rs10.55 trillion during Friday’s intraday session.

ECONOMIC INDICATORS AND INFLUENCES:

The rally was bolstered by positive comments from global ratings agencies. Fitch highlighted that the federal budget for 2024-25 strengthens the chances of an IMF deal, while Moody’s indicated that the budget could support ongoing IMF negotiations for a new Extended Fund Facility (EFF) program.

Additionally, the State Bank of Pakistan (SBP) contributed to the market’s positive momentum by initiating monetary easing after a four-year hiatus. The SBP cut its key policy rate by 150 basis points to 20.5% on June 10, exceeding market expectations.

SECTOR AND STOCK PERFORMANCE:

  • Top Sectors: Leading the gains were Commercial Banks (+1,486 points), Power Generation & Distribution (+398 points), Fertilizer (+156 points), Chemical (+76 points), and Textile Composite (+55 points).
  • Lagging Sectors: The sectors that dragged the index included Cement (-89 points), Technology & Communication (-67 points), Oil & Gas Marketing Companies (-41 points), Leather & Tanneries (-17 points), and Insurance (-12 points).
  • Top Performing Stocks: United Bank Limited (UBL) contributed 403 points, Hub Power Company (HUBC) added 397 points, MCB Bank (MCB) gained 278 points, Habib Bank Limited (HBL) added 248 points, and Bank AL Habib Limited (BAHL) contributed 193 points.
  • Underperforming Stocks: Lucky Cement (LUCK), Systems Limited (SYS), Mari Petroleum Company (MARI), Engro Corporation (ENGRO), and Pakistan State Oil (PSO) collectively subtracted 254 points from the index.

INVESTMENT TRENDS:

Foreign investors were net buyers, with an inflow of $0.64 million. Companies led the buying spree with a net investment of $7.97 million, focusing primarily on diversified sectors while divesting from Technology and Communication. Conversely, Banks/DFIs were the leading sellers, offloading $10.05 million, mainly from the Commercial Banks sector.

ECONOMIC CONTEXT:

In broader economic news, Pakistan posted a current account deficit of $270 million in May, mainly due to a significant increase in the primary income deficit. However, the country attracted $511.4 million in foreign investment during the same period. Notably, the KSE-100 index has gained 37,358 points, or 90.1%, during the fiscal year and witnessed a cumulative increase of 16,359 points, or 26.2%, in the current calendar year.

WEEKLY PERFORMANCE AND INDICATORS:

  • Exchange Rates: The PKR interbank rate remained stable at 278.5104 against the USD. The open market rate saw slight fluctuations with USD at 280.37.
  • Commodities: Gold prices in Karachi increased marginally to Rs208,248 per 10 grams, while international gold prices decreased slightly to $2,320.90 per ounce. Silver prices showed minor changes.
  • Interest Rates: The KIBOR 6M rate remained steady at 20.11%, while the 10Y PIB rate showed a slight increase to 14.07%.
  • Global Currencies: The EUR, GBP, CHF, JPY, and CNY saw minor fluctuations against the USD.

INFLATION AND TRADE:

  • Inflation: The Sensitive Price Indicator (SPI) increased by 0.94% WoW and 23.78% YoY.
  • Trade: Exports rose to $2,840 million in May, while imports stood at $4,948 million, resulting in a trade balance of -$2,108 million.
  • Remittances: Home remittances increased to $3,242.90 million in May.

QUARTERLY AND ANNUAL INDICATORS:

 

  • GDP Growth Rate: For FY24, GDP growth is projected at 2.38%, with significant contributions from agriculture (6.25%) and manufacturing (2.42%).
  • Debt and Liabilities: Total debt and liabilities were noted at 91.10% of GDP for FY23.
  • Trade Balance: The trade balance from July to May showed a deficit of $21,731 million.
  • Worker Remittances: Cumulative worker remittances for July to May stood at $27,093.38 million.
  • Inflation Rate: The annual inflation rate for July to May was recorded at 24.52%.
ALI

ALI

Experienced Senior Research Analyst

SIKANDER RAZA

SIKANDER RAZA

Sikander Raza, a Senior Technical Analyst

HAMZA SALEEM

HAMZA SALEEM

Hamza Saleem, a Senior Business Analyst

IRSA

IRSA

Irsa Sajjad, as a Research Analyst for Equities

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