PSX index bounces back up 1.8%wow
Pakistan Stock Exchange (PSX) witnessed volatility during the week ended on January 17, 2025 due to political uncertainty surrounding the announcement of the graft case involving PTI Chief, Imran Khan. However, following the verdict’s announcement on Friday, market regained momentum, with the benchmark KSE-100 posting a gain of 2,025 points, up 1.8%WoWto close at 115,272 points.
Overall, Banks, Power, and Pharma sectors were the primary contributors to the weekly index rally.
On the macro front, Pakistan’s current account for December 2024 recorded a surplus of US$582 million, driven by 9%YoY increase in remittances. This brings the 1HFY25 current account to a surplus of US$1.2 billion as against a deficit of US$1.4 billion during the same period last year.
Circular debt pertaining to power sector decreased by 11%YoY in November 2024, falling to PKR2.38 trillion, and the continuation of this trend is expected to improve the cash-flow situation for the country’s energy sector.
With easing prices of seasonal perishable food items, weekly inflation (SPI) declined to a 7-year low of 1.2%YoY. As against this, industrial activity remained subdued, with the LSM index down by 1.3%YoY in 5MFY25.
Market participation also dropped, with average daily traded volume falling by 29%WoW to 558 million shares, from 782 million shares in the earlier week.
Foreign exchange reserves held by State Bank of Pakistan (SBP) rose by US$30 million to US$11.7 billion as of January 10, 2025.
Other major news flow during the week included: 1) Saudi firm Manara likely to invest in Reko Diq mine 2) World Bank pledges US$40 billion to Pakistan under 10-year framework, 3) Urea sales increased by 58%YoY during CY24 to 6.6 million tons, 4) prices of POL products increased and 5) Car sales surge by 51%YoY in 1HFY25.
Refinery, Pharmaceuticals, and Power generation & distribution were amongst the top performing sectors, while Jute, Leasing companies, and Sugar were the laggards.
Major net selling was recorded by Foreigners and Mutual Funds with a total net sell of US$15.7 million. Individuals and Companies absorbed most of the selling with a net buy of US$21.3 million.
Top performing scrips of the week were: SEARL, GLAXO, ATRL, NRL, and PSEL, while laggards included: ENGROH, PABC, JDWS, AKBL, PGLC.
According to Pakistan’s leading brokerage house, AKD Securities the PSX is expected to maintain its positive trajectory, driven by an anticipated shift of funds from fixed income securities to equities amid falling fixed income yields.
With easing inflation, the upcoming MPC meeting, scheduled on January 27, 2025, will remain a key focus.
Over the medium term, the KSE-100 index is anticipated to sustain its upward momentum, primarily driven by the strong profitability of fertilizer companies, higher sustainable RoEs of banks and improving cash flows of E&Ps and OMCs, benefitting from falling interest rates.
Pakistan’s largest oil marketing company, Pakistan State Oil Company (PSO) is projected to report a quarterly profit after tax of PKR8.4 billion (EPS: PKR17.9), reflecting a healthy increase from Loss after tax of PKR14.1 billion (LPS: PKR30.1) for the same period last year. The change on fortune can be attributed to: 1) absence of inventory losses as compared to the same period last year, 2) growth in volumetric offtakes, 3) healthy delayed-payment income on account of past-due gas receivables from SNGPL and, 4) reduction in finance costs by 33%YoY due to declining short-term borrowings and lower lending rates for both forex and domestic borrowings.
In terms of offtakes, PSO delivered total volumes of 2.0 million tons during 2QFY25 (up 7%YoY), where-in MS/HSD volumes rose by 7%YoY each, while RFO offtakes were down by 48%YoY during the quarter.
For the RLNG segment, PSO handled 25 cargoes during 2QFY25 (as compared to 25 cargoes in SPLY), where-in average DES price was reported at US$9.12/ mmbtu as against US$10.4/ mmbtu during 2QFY24, resulting in topline from the RLNG segment to PKR222bn (down 5%YoY). AKD Securities has a ‘BUY’ rating on the stock, with a December 2025 TP of PKR729/share, representing an upside potential of 86% from last close.
Attock Petroleum (APL) is expected to post an uneventful 2QFY25 financial result with profit after tax of PKR2.4bn (EPS: PKR19.5), down by 4%YoY. The said decline is attributable to: 1) lower volumetric offtakes during the quarter and 2) lower finance income reported at PKR1.9 billion for the period (down 22%YoY), amidst dropping yields on fixed-income investments during the quarter. Consequently, AKD Securities expects APL’s topline to amount to PKR117 billion, down 14%YoY, with offtakes reported at 365,000 tons (down 2%YoY) during the period. However, relative stability in fuel prices led to non-incurrence of inventory losses as opposed to last year, resulting in gross margins to 3.5% during the period as against 2.3% for the same period last year The brokerage house have a ‘BUY’ rating on the stock, with a December 2025 TP of PKR825/ share, representing total upside potential of 61% from last close.
Power sector circular debt declined by PKR12 billion during 5MFY25, driven by elevated PYA recoveries, negative QTA/FCA adjustments, fiscal payments by the GoP, and improved recoveries during the period. Reduction in electricity costs due to increasing demand and renegotiation of IPP contracts along with improvement in DISCO efficiencies would enable the gradual clearance of outstanding circular debt, while lowering consumer tariffs. Ease in power circular debt will be beneficial for companies under its coverage space, namely: OGDC, PPL, PSO, HUBC and NPL, while also enhancing receivable recoverability for the listed gas distribution companies i.e. SNGP and SSGC.