Karachi, January 25, 2025 – Investors at the Pakistan Stock Exchange (PSX) are eagerly anticipating the Monetary Policy Committee (MPC) meeting scheduled for January 27, 2025. This meeting, the first of the calendar year, is expected to set the tone for the PSX in the coming weeks.
Analysts at Arif Habib Limited have projected a 100 basis points (bps) cut in the monetary policy rate, bringing it down to 12%. This would mark a return to levels last seen in March 2022. The anticipated rate cut has already influenced market sentiment, as participants prepare for the announcement. Additionally, the upcoming release of corporate financial results is expected to drive activity in specific PSX-listed scrips.
The PSX’s KSE-100 index is currently trading at a price-to-earnings ratio (PER) of 6.1x for 2025, significantly below its 10-year average of 8.0x. This lower valuation offers a compelling dividend yield of approximately 7.7%, compared to the 10-year average of 6.5%, making PSX an attractive option for investors.
The stock market began the week on a positive note, buoyed by expectations of the monetary easing. However, mid-week profit-taking reversed some gains, reflecting investor caution. Meanwhile, global oil prices fell 3% week-on-week (WoW), following concerns over U.S. President Trump’s plan to ramp up domestic oil production. This development affected oil-related scrips on the PSX.
In economic updates, Pakistan secured a $1 billion loan agreement with two Middle Eastern banks. During the weekly T-bill auction, the State Bank of Pakistan (SBP) raised PKR 326 billion, with cut-off yields for 3-month, 6-month, and 12-month T-bills set at 11.59%, 11.40%, and 11.39%, respectively. On the export front, the textile sector showed resilience with a 9.7% year-on-year increase in 1HFY25, reaching $9.1 billion. Power generation also grew by 1% YoY in December 2024.
The KSE-100 index closed the week at 114,880 points, recording a WoW decline of 392 points (0.34%). Sector-wise, the Oil & Gas Exploration, Power, and Automobile sectors posted negative contributions, while Fertilizer, Cement, and Technology supported the index.
Foreign investors remained net buyers, with inflows of $5.6 million this week, primarily targeting the Cement and E&P sectors. Local institutions, however, reported net selling, led by Banks ($14.1 million). Average trading volumes rose 25.1% WoW to 698 million shares, while the average value traded increased 7.0% WoW to $123.9 million.
All eyes now turn to the MPC’s announcement, which is expected to be the key driver of PSX trends in the coming week.