Karachi, September 28, 2024 – Pakistan stocks is expected to maintain its positive trajectory next week, buoyed by the receipt of the first tranche under the $7 billion loan program from the International Monetary Fund (IMF).
Analysts at Arif Habib Limited project that the disbursement along with declining inflation, will support continued gains in the Pakistan stocks. Inflation is anticipated to fall further to 7.3%, providing additional optimism to investors.
The Pakistan Stock Exchange (PSX) has shown resilience in recent weeks, with the benchmark KSE-100 index reaching a historic high, surpassing the 82,000 level. This surge was at the Pakistan stocks is largely driven by the IMF’s approval of the Extended Fund Facility (EFF), which sent positive signals to both local and international investors. However, later in the week, the market experienced some profit-taking, causing the index to pull back slightly. It closed at 81,292 points, reflecting a week-on-week decrease of 0.95%.
In terms of performance, the KSE-100 index of Pakistan stocks is currently trading at a price-to-earnings ratio (PER) of 4.1x for 2025, which is lower than its five-year average of 5.9x. The market is offering an attractive dividend yield of around 10.3%, also above its five-year average of 8.2%. This valuation suggests that the market has room to grow, particularly as macroeconomic conditions improve.
Sector-wise, the market saw positive contributions from Fertilizer, Commercial Banks, Automobile Parts & Accessories, Leather & Tanneries, and Pharmaceuticals. Fertilizer stocks led the way, contributing 440 points to the index. However, some sectors, including Power Generation & Distribution and Oil & Gas Exploration, saw negative contributions, with Power Generation taking the biggest hit, contributing a decline of 755 points.
The market’s mixed performance was also reflected in foreign investor activity, with foreign selling continuing for another week. A total of $12.4 million in foreign outflows was recorded, though this was lower than the $23.2 million in net selling the previous week. Major selling was observed in Exploration & Production (E&P) stocks and Fertilizer. In contrast, local buying was strong, with mutual funds and companies accumulating shares worth $16.2 million and $8.9 million, respectively.
Overall trading volumes averaged 391 million shares, down 16.7% week-on-week, while the average value traded stood at $61 million, a 7.9% decline compared to the previous week. Looking ahead, the IMF tranche and improving economic fundamentals could help drive the market higher, particularly if inflation continues to decline and investor confidence strengthens.
