The stock market closed the week on a high note, signaling optimism for continued growth. Political unpredictability and rising crude oil prices caused fluctuations throughout the week, but appealing valuations and improving economic indicators helped maintain investor interest. Analysts anticipate strong financial results in the upcoming earnings season, further boosting market confidence.
Positive Week-End Performance
The KSE-100 index recorded a 2,025-point increase (+1.8%) week-over-week, closing at 115,272 points. Average trading value rose to $115.8 million, marking a 1.1% week-over-week increase, while average volumes dropped by 28.7% to 558 million shares. The week’s final trading session played a key role in stabilizing the market, aided by recent political developments.
According to a report by Arif Habib Limited, specific scrips with strong valuations continued to attract investors, contributing to the market’s positive sentiment. The result season, which begins next week, is expected to spotlight companies with strong financial performances.
Sectoral Contributions
Commercial banks, power generation, pharmaceuticals, cement, and technology sectors led the gains, contributing significantly to the week’s positive performance. Key contributors included United Bank Limited (427 points), Hub Power Company (360 points), and Searle Pakistan (100 points).
However, the sugar sector posted negative contributions (-23 points), alongside scrips like Oil & Gas Development Company (-64 points), Pakistan Petroleum Limited (-53 points), and Askari Bank Limited (-30 points).
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Foreign and Local Activity
Foreign investor activity showed a net sell-off of $8.7 million over the four-day week, with banks accounting for $3.5 million of the sales. Conversely, local investors, including individuals and corporations, actively purchased stocks, with net inflows of $12.8 million and $8.5 million, respectively.
Analysts at Topline Securities attributed the week’s recovery to value investors capitalizing on the market’s previous 3.7% decline. This trend, combined with favorable political and economic developments, contributed to the strong finish.
Encouraging Economic Indicators
Economic improvements also supported market sentiment. The current account surplus reached $582 million in December 2024, bringing the half-year surplus to $1.2 billion. This was driven by higher remittances and a controlled trade deficit.
Additionally, the UAE extended a $2 billion rollover for another year, while Pakistan prepared to issue panda bonds worth $200–250 million to strengthen external financing. The World Bank also pledged $40 billion in funding over the next decade under the Country Partnership Framework.
In the recent PIB auction, the government raised Rs385 billion, surpassing the Rs350 billion target, with yields dropping by 19 to 61 basis points across different tenures.
Key Developments in Other Sectors
Passenger car sales saw a sharp 60% increase in December 2024, reflecting improved consumer demand. The government also approved ongoing negotiations with 14 Independent Power Producers (IPPs), potentially providing Rs137 billion in annual relief to power consumers.
Outlook for the Coming Week
With attractive valuations and promising economic indicators, the market is expected to maintain its positive momentum. Investors will likely focus on sectors with strong fundamentals, particularly as earnings season begins. While challenges like political uncertainty and fluctuating oil prices remain, the outlook for growth remains optimistic.
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