Pakistan stocks likely to be positive amid earnings announcements

Pakistan stocks are expected to be influenced by corporate earnings announcements in the next week, which could set the tone for sector-specific movements, dealers said.

An analyst at AKD Securities mentioned, “Any developments regarding the upcoming IMF review or the $1.0 billion climate financing by the IMF could further trigger positive momentum.”

Over the medium term, the KSE-100 is anticipated to sustain its upward trajectory, with a target of 165,215 points by December 2025. This is primarily driven by strong earnings in fertilizers, sustained ROEs in banks, and improving cash flows of E&Ps and OMCs, benefiting from falling interest rates and economic stability.

An analyst at Arif Habib Limited expects the market to continue to be positive in the upcoming week. Investors will be keeping a close watch on the IMF mission’s visit for the review and discussion of climate financing and developments resulting from meetings with the government.

“Moreover, with the ongoing result season, certain scrips are anticipated to be in the limelight amid the expectation of robust results.”

An analyst from Spectrum Securities indicated that the market is expected to continue trading in a narrow band as index heavyweight sectors/stocks are struggling to advance amid outflows towards mid and small caps, such as cement in recent days, and new offerings such as Barket Frisian’s book building.

Most significantly, mutual funds have not been able to attract new inflows in their equity funds, as reflected in their continuous selling in the market, besides the regular foreign selling (outflows).

The market will require a new liquidity push to move higher, and in the absence of new flows, we may see the market moving in a narrow band in the near term.

“As we are now near the end of the earnings announcement season, the holy month of Ramadan will start in March with reduced market timing, which may result in lower trading volumes as has been the case in the past,” a dealer said.

However, during March, the IMF review mission will be concluded, and most likely, the country will receive its next tranche.

“We continue to see big value in Pakistani equities across various sectors, and stock prices are gradually adjusting to quarterly progress in earnings”.

Sectors and stocks that are showing clear signs of earnings growth in the coming quarters will adjust upward, while those having earnings concerns or stretched valuations will be adjusted downward accordingly.

Analysts believe downside risks remain limited due to broader attractive valuations, and therefore, the stance should remain on accumulation along with reasonable diversification.

The KSE-100 is flirting near its short-term moving averages, with the 30-day moving average at 113,187. The upside resistance band is 114k-116k, while downward support is 111k-109k.

The KSE-100 remained positive for the week ended February 21, 2025, closing at the level of 112,801 points, gaining 0.6% week-on-week.

Average volumes increased by 13% week-on-week to 593 million shares. Foreigner selling continued during this week, clocking in at $5.1 million compared to a net sell of $7.1 million last week.