KARACHI: Following a bloodbath in the preceding week, the equities partially recovered losses and closed the shortened four-session outgoing week in the green despite extreme volatility driven by tensions on the western border and continued softening monetary policy and positive economic data.

According to Arif Habib Ltd (AHL), the week began with a remarkable recovery, as the benchmark KSE-100 index surged by 4,411.3 points on Monday, marking the second-highest single-day point-wise gain in the PSX history. This rally was primarily driven by fresh inflows following the steep correction in the previous week. As the week progressed, the market sentiments remained mixed.

The government raised Rs913bn at the T-bill auction, falling short of the Rs1,200bn target. The cut-off yields were set at 11.99pc for three months, 11.99pc for 6-month and 12.29pc for 12-month tenors.

After a consistent increase in the last several weeks, the State Bank of Pakistan’s foreign exchange reserves declined by $228 million to $11.9 billion during the week ending Dec 26. The rupee also remained under pressure and depreciated by 0.22pc to Rs278.47 against the greenback week-on-week.

As a result, the KSE 100 index settled at 111,351 points, marking a gain of 1,838.0 points or 1.68pc week-on-week.

Foreigner selling continued clocking in at $6.8m compared to a net sell of $11.6m in the preceding week. Significant selling was witnessed in banks ($4.7m) followed by ‘all-other-sectors’ ($2m). On the local front, buying was reported by individuals ($14.9m) and banks/DFI’s ($4.8m). However, the average volume plunged 31pc to 796m shares while the value traded settled dipped by a quarter to $154m week-on-week.

In continuation of strong performances over the last two years, AKD Securities Ltd said the market is expected to continue its upward trajectory in CY25 given the decline in interest rates to single digits.

The brokerage house foresees the index would post a robust return of 55.5pc in CY25, primarily driven by the strong profitability of fertiliser companies, higher sustainable ROEs of banks and improving cash flows of E&Ps and OMCs, amid falling fixed income yields.

Strong performance

Topline Securities Ltd noted that the PSX had been the top performer among Pakistan’s asset classes in 2024, with the benchmark KSE-100 index up 78pc, making it the second-best performing market globally after Argentina.

“Over the past 18 months, the PSX delivered a 177pc return in dollar terms (169pc in rupee terms), driven by macroeconomic stabilisation and improvements in external accounts,” Topline Securities Ltd CEO Mohammed Sohail said in its post on LinkedIn.

Despite the rally, he noted that the market capitalisation was still $50bn, half its 2017 peak of $100bn. This decline was due to the rupee devaluation, large dividend payouts, and fewer listings. As a percentage of GDP, the PSX was at 11pc, below the 10-year average of 16pc and a peak of 29pc in 2017.

Trading activity surged in 2024, with average daily volume in the ready/cash market reaching Rs54bn ($190m) in December, up from Rs22bn in 2024 and Rs10bn in 2023.

Local mutual funds and insurance companies were the key buyers, investing heavily as interest rates fell. Foreign investors were net sellers primarily due to passive fund outflows. Active frontier funds, however, were net buyers during 2024.

Published in Dawn, December 29th, 2024