Karachi, January 11, 2025 – Analysts at Arif Habib Limited have forecasted a positive outlook for the Pakistan Stock Exchange (PSX) in the coming week, beginning January 13, 2025. This optimism stems from expectations of favorable current account figures for December 2024 and attractive valuations in several scrips following a recent market correction.
The benchmark KSE-100 index of PSX is trading at a price-to-earnings ratio (PER) of 6.1x (2025), significantly lower than its 10-year average of 8.0x. Additionally, the index offers an attractive dividend yield of approximately 7.8%, compared to its 10-year average of 6.5%, which analysts believe will attract investors.
Market Performance and Key Developments
The PSX endured consistent pressure throughout the week, with the KSE-100 index closing at 113,247 points, reflecting a decline of 4,340 points (3.7% week-on-week). This drop was attributed to profit-taking by institutional investors, political uncertainty, and new tax amendments imposing restrictions on non-filing PSX investors.
Despite the decline, the broader economic landscape showed positive signals. The World Bank is poised to approve a $20 billion lending package for Pakistan, while the UAE rolled over $2 billion in debt. Furthermore, remittances improved by 33% year-on-year in the first half of FY25, reaching $17.8 billion.
In the T-bill auction, cut-off yields dropped by 21-50 basis points, hitting their lowest levels since 2022. Additionally, the PSX held a successful GIS auction, raising PKR 138 billion, with most funds sourced from the 10-year VRR Sukuk.
Sector and Scrip Analysis
Sector-wise, negative contributions to the PSX came from Banks (-967 points), Fertilizers (-603 points), OMCs (-534 points), Tech (-453 points), and Cement (-367 points). Conversely, positive contributions were seen in Sugar (+77 points), Miscellaneous (+11 points), and REIT funds (+9 points).
Scrip-wise, EFERT (-423 points), MARI (-343 points), PSO (-333 points), UBL (-301 points), and SYS (-228 points) dragged the index down. However, JDWS (+77 points), OGDC (+63 points), PKGP (+48 points), MUREB (+29 points), and SCBPL (+19 points) provided some support.
Foreign and Local Investment Trends
Foreign investors sold $5.7 million in equities this week, compared to a net buy of $0.9 million last week. Significant selling was observed in Banks ($3.8 million) and Fertilizers ($2.2 million). On the local front, Companies and Individuals were net buyers, purchasing $10.1 million and $5.9 million, respectively.
Average volumes on the PSX declined by 25% week-on-week to 782 million shares, while the average value traded fell by 27%, settling at $115 million.
As analysts remain optimistic about PSX recovery, investor sentiment is expected to improve, supported by attractive valuations and positive economic indicators.