Karachi, February 8, 2025 – Market analysts at Arif Habib Limited anticipate that the KSE-100 index of the Pakistan Stock Exchange (PSX) is likely to recover and trade in the green during the upcoming week, beginning Monday, February 10, 2025.
According to analysts, the ongoing corporate earnings season is expected to play a crucial role in market performance, with selected stocks likely to attract significant investor interest due to expectations of strong financial results. The KSE-100 index is currently trading at a Price-to-Earnings Ratio (PER) of 6.0x (2025), which remains lower than its 10-year average of 8.0x, offering an attractive dividend yield of approximately 8.4%, higher than its historical average of 6.5%.
Market Performance and Economic Indicators
Throughout the past week, the KSE-100 index remained under selling pressure, as profit-taking, foreign outflows, and apprehensions regarding the upcoming IMF review led to a downward trend. The index closed at 110,323 points, marking a decline of 3,933 points (3.44% WoW).
On the macroeconomic front, some key developments influenced investor sentiment:
• Inflation: Headline inflation in January 2025 fell to a 101-month low of 2.4% YoY, offering some relief.
• Trade Deficit: The trade deficit widened 18% YoY in January 2025, reaching $2.3 billion.
• T-Bill Auction: The State Bank of Pakistan (SBP) successfully raised PKR 452 billion in a recent auction against a target of PKR 450 billion.
• Petroleum Sales: Maintained stability at 1.38 million tons in January 2025, reflecting 8% MoM growth.
• Cement Dispatches: Increased 14% YoY, reaching 3.89 million tons.
• Urea & DAP Sales: Declined 27% and 6% YoY, respectively.
• SBP Reserves: Increased by $46 million WoW, reaching $11.4 billion.
Sectoral and Stock-Specific Performance
The KSE-100 index saw negative contributions from key sectors:
• Oil & Gas Exploration (-821 points)
• Commercial Banks (-593 points)
• Fertilizer (-479 points)
• Technology & Communication (-264 points)
• Oil & Gas Marketing (-232 points)
Sectors that contributed positively included:
• Insurance (+23 points)
• Real Estate Investment Trusts (REIT) (+4 points)
On a stock-specific basis, Mari Petroleum (-291 points), Fauji Fertilizer (-241 points), PPL (-235 points), HBL (-226 points), and Engro Fertilizer (-202 points) weighed heavily on the index. Conversely, Lucky Cement (+81 points), Sazgar Engineering (+56 points), National Bank (+26 points), Adamjee Insurance (+26 points), and Colgate-Palmolive (+19 points) provided some support.
Foreign and Local Investment Trends
Foreign investors remained net sellers, with outflows totaling $9.88 million compared to $4.7 million last week. The largest selling pressure came from:
• Miscellaneous Sectors ($6.9 million)
• Cement Sector ($2.3 million)
On the local front, Insurance Companies ($9.6 million) and Individual Investors ($8.0 million) emerged as major buyers, cushioning some of the selling pressure.
Outlook for Next Week
Despite the recent decline, market analysts remain optimistic that the KSE-100 index will see an upward trajectory next week. With corporate earnings announcements expected to drive momentum and economic indicators offering mixed signals, investor sentiment could improve, leading to a possible recovery. Moreover, clarity on the IMF review process and external funding inflows will play a key role in shaping the KSE-100 index performance in the near term.