Pakistan stocks expected to stay positive as IMF review completed

Pakistan stocks are expected to remain positive, with the potential announcement of a staff-level agreement on the first review over the weekend serving as a key trigger for momentum.

An analyst from AKD Securities said the KSE-100 index is anticipated to sustain its upward trajectory, targeting 165,215 points by December 2025.

This growth is primarily driven by strong earnings in fertilizers, sustained returns on equity (ROEs) in banks, and improving cash flows for exploration and production (E&P) companies, as well as oil marketing companies (OMCs). “Falling interest rates and economic stability are expected to further boost the market”.

An analyst from Spectrum Securities said the index has moved back closer to its January highs near 116,000 points and its all-time high of 118,735 points, achieved on Jan. 6, following a 5% recovery (6,000 points) from February lows.

“These gains are dominated by cement sector stocks, while heavyweight banks, fertilizer, and E&P stocks struggled to outperform,” the analyst noted.

“Index gains may stagnate below new highs due to a lack of positive triggers in heavyweight sectors and stocks,” the analyst added.

With the March quarter drawing to a close, focus will shift to first-quarter (or third-quarter) earnings. Banks, fertilizer, and E&P sectors are expected to show weakness in earnings, while cement, textiles, pharmaceuticals, and autos are projected to see improvements.

As a result, sector rotation will continue, with money moving out of existing heavyweight stocks and into more promising companies that offer better growth prospects and trade at attractive valuations.

An analyst from Arif Habib Ltd. anticipates the market to remain positive in the coming week, as investors are likely to expect progress in government and IMF talks.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said financial results from the banking and fertilizer sectors, along with the IMF deal, appear likely to materialize soon. He expressed optimism that the market will see healthy activity.

Ahmad added that last week saw notable activity in energy and oil stocks, driven by efforts to resolve the circular debt issue.

“Though the IMF raised concerns over clearing the circular debt amounting to PKR 1.25 trillion, the government’s aim to lower circular debt capped gains in scrips that would benefit from the resolution of the debt,” Ahmad explained.

The benchmark KSE-100 index closed at 115,536 points, reflecting a gain of 1,137 points, or 0.99%, for the week ended March 14, 2025.

Foreign selling continued during the week, totaling $2.61 million, compared to a net sell of $5.3 million the previous week.

Stocks in PSO, OGDC, and gas companies saw the most activity during this period.

Salman said the market consolidated, with the index trading in a narrow range early in the week following the State Bank of Pakistan’s decision to keep interest rates unchanged. However, activity picked up later in the week as positive news emerged from IMF and government talks.

“These developments suggest that the IMF has agreed to reduce the revenue collection target by PKR 620 billion for the current fiscal year, following a shortfall of PKR 606 billion during the first eight months of the year.”