Karachi, April 20, 2024 – The Pakistan Stock Exchange (PSX) anticipates a surge in positive sentiments next week, commencing April 22, 2024, driven by discussions surrounding a new IMF loan program and a significant Saudi fund facility.
Analysts at Arif Habib Limited have highlighted that the market will keenly observe developments regarding potential investments from Saudi Arabia and the Extended Fund Facility (EFF) program by the International Monetary Fund (IMF). These discussions are expected to inject optimism into the market, stimulating investor confidence.
Despite a mixed sentiment observed during the past week, the PSX concluded on a positive note, reaching its highest-ever index of 70,910 points. The momentum was largely attributed to promising indications from a delegation led by Saudi Arabia’s foreign minister, hinting at substantial investment opportunities within the country. Additionally, the IMF reiterated its support for Pakistan’s economic reform agenda, further bolstering market sentiment.
Amidst ongoing corporate result announcements, certain stocks are poised to garner attention, with expectations of robust financial performance. The Karachi Stock Exchange-100 (KSE-100) is currently trading at a Price-to-Earnings Ratio (PER) of 4.6x (2024), compared to its five-year average of 5.6x. Furthermore, it offers a dividend yield of 9.8 percent, higher than its five-year average of 7.6 percent.
Despite positive market dynamics, some economic indicators present challenges. Recent data from the Pakistan Bureau of Statistics (PBS) indicated a 4 percent Month-on-Month (MoM) decline in the Large Scale Manufacturing (LSM) Index for February 2024. Additionally, power generation decreased by 8 percent Year-on-Year (YoY) in March 2024.
In terms of foreign exchange, reserves saw a marginal increase of USD 14 million, reaching 8.1 billion. However, the Pakistani Rupee (PKR) experienced a slight depreciation, closing at 278.31 against the US Dollar, reflecting a decrease of PKR 0.37 or 0.13 percent Week-on-Week (WoW).
Sector-wise, positive contributions stemmed from Commercial Banks (436 points), Oil & Gas Exploration (167 points), Power (161 points), Refinery (43 points), and Oil & Gas Marketing companies (30 points). Conversely, sectors such as Technology & Communication (118 points), Pharmaceuticals (31 points), and Engineering (30 points) experienced negative impacts.
Foreign investors continued to show interest, with net buying totaling USD 33.9 million during the week, compared to a net buy of USD 4.2 million in the previous week. Major buying activity was observed in various sectors, particularly All Other Sector and Commercial Banks. Conversely, selling was primarily led by Individuals and Banks/DFIs on the local front.
The average trading volume surged by 36 percent WoW to 492 million shares, while the average traded value increased by 31 percent WoW to USD 77 million.
In summary, the upcoming week is poised to witness heightened activity at the PSX, fueled by expectations surrounding the IMF loan program and Saudi fund facility, alongside ongoing corporate earnings releases. Investor sentiment remains cautiously optimistic, albeit influenced by both domestic and international economic factors.
