How did the market perform in April 2024?

In April 2024, the Karachi Stock Exchange 100 (KSE100) Index saw significant gains, climbing by 6.1% Month-on-Month (MoM), equivalent to 4,097 points. This increase surpassed the 3.8% MoM growth observed in March 2024. The market experienced positive momentum driven by various developments and market sentiments.

Key Highlights

• Market Performance: The local bourse surged during April’24, fueled by receding inflation expectations and positive market reactions to notable events. These included the visit of a Saudi delegation, finalization of a US$3.0bn IMF Stand-by Arrangement, and prospects of a larger Extended Fund Facility (EFF).
• Monetary Policy Committee (MPC) Decision: There was anticipation and mixed expectations surrounding the MPC’s decision on the policy rate. The central bank ultimately opted to maintain the status quo, signaling a cautious approach amid ongoing geopolitical events and discussions related to the new EFF program.
• Current Account Surplus: Pakistan recorded its largest current account surplus in nine years in March 2024, amounting to US$619 million. This contributed to a significant reduction in the nine-month deficit to US$508 million, down 88% year-on-year (YoY).
• Sector Performance: The Fertilizer sector emerged as the best performer in April’24, posting a return of approximately 12.23% MoM. This was driven by expectations of uninterrupted gas supply to Urea producers and improving sector fundamentals.

Sectoral Performance

The Fertilizer sector led the market gains, followed by Synthetic & Rayon, Pharmaceuticals, Sugar & Allied, and ETFs. Conversely, the Tobacco, Transport, and Miscellaneous sectors experienced declines during the period.

Top performers

• Top Performers:
• Fertilizers: ~12.23% MoM
• Synthetic & Rayon: ~12.19% MoM
• Pharmaceuticals: ~11.9% MoM
• Sugar & Allied: ~11.7% MoM
• ETFs: ~10.4% MoM

Top Decliners

• Decliners:
• Tobacco: -17.2% MoM
• Transport: -11.3% MoM
• Miscellaneous: -10.9% MoM

Investment Perspective

The State Bank of Pakistan (SBP) is maintaining real rates at around 5% as of April’24 to anchor inflation expectations. However, the trajectory of the anticipated easing cycle will depend on stabilizing the external account, primarily through IMF oversight.

The market’s future direction is anticipated to be influenced by:

• Revenue measures in the upcoming Federal Budget.
• Potential revisions in electricity and gas tariffs during the summer months, which could impact inflation figures.

Source: AKD Research