KARACHI: Amid falling volume, the Pakistan Stock Exchange (PSX) maintained a bullish spell, pushing the KSE 100 index to an all-time high near 91,000 in the outgoing week.

The rate cut expectation drove the market to new highs despite some uncertainties about the IMF review this month as the country missed some key benchmarks set for the first quarter.

Arif Habib Ltd (AHL) said the market commenced on a positive note this week on the back of the expectation of a rate cut in the upcoming monetary policy next week along with robust financial results, due to which the market reached an all-time high of 91,358 points in the intraday on Oct 29. On the economic front, Pakistan achieved a rare budget surplus of Rs1.7 trillion, the first after 2QFY04). Moreover, the primary surplus settled at Rs3tr. In addition, Saudi Arabia agreed to invest a further $600m in Pakistan, which took the total investment commitments to $2.8 billion.

However, the market came under selling pressure on Wednesday and Thursday after the Federal Board of Revenue (FBR) reported that it missed the collection target by a whopping Rs190bn for July-October.

The collection fell short of the target by Rs101bn in October owing to falling imports and a sharp deceleration in inflation. In October, tax collection reached Rs879bn against the target of Rs980bn. However, it saw an increase of 24pc compared to Rs711bn in the same month last year. Collection in the first four months of FY25 stood at Rs3.442tr compared to an estimated target of Rs3.632tr.

However, the investors began value-hunting as the index witnessed a 1,893-point rally, the fifth highest single-day gain in absolute terms, in the weekend session, pushing the index near 91,000, on the rising hopes of a bigger cut in the interest rate in the State Bank of Pakistan’s (SBP) Monetary Policy Committee meeting on Monday.

The Consumer Price Index-based inflation rose to 7.2pc year-on-year from 6.9pc in September, with the real interest rate comfortably above 10pc at the current SBP policy rate of 17.5pc.

Meanwhile, the SBP reserves rose $116m to $11.2bn during the week ended on Oct 25. The forex holdings of the central bank continued to increase since the last week of September after receipt of the first tranche of $1.03bn under the 37-month $7bn Extended Fund Facility.

The central bank also purchased about $1.3bn from the interbank market in June and July to boost its forex holdings to meet external debt repayment obligations.

As a result, the market settled at 90,859.85 points, up 866 points or 0.96pc week-on-week.

Sector-wise positive contributions came from exploration and production (391 points), technology (319 points), cement (244 points), oil marketing companies (189 points) and pharmaceuticals (174 points).

Meanwhile, the sectors that mainly contributed negatively were fertiliser (331 points), leather and tanneries (73 points), and engineering (45 points). Scrip-wise positive contributors were Systems Ltd (345 points), Pakistan Petroleum Ltd (345 points), United Bank Ltd (223 points), PSO (173 points), and Cherat Cement (154 points).

Meanwhile, scrip-wise negative contributions came from Engro Fertiliser (209 points), Mari Petroleum (144 points), National Bank of Pakistan (119 points), Engro Corporation (109 points), and Meezan Bank (105 points).

After a break of two weeks, foreigner buying was witnessed, clocking in at $1.97m compared to a net sell of $16.36m last week. Major buying was seen in all other sectors ($4.7m), followed by cement ($2.4m). On the local front, selling was reported by banks/DFIs ($13.1m), followed by other organisations ($1.1m).

The average trading volume fell 16.5pc to 559m shares while the average value dipped 9.3pc to $95m week-on-week.

According to AKD Securities Ltd, the market will stay positive next week, with a primary focus on the upcoming MPC meeting, where an anticipated rate cut could further bolster market momentum.

Despite the recent rally, valuations remain attractive, with the market trading at a price-to-earnings multiple of 4.0x and offering a dividend yield of 11.4pc.

Published in Dawn, November 3rd, 2024