Karachi, February 17, 2024 – As Pakistan enters the week starting February 19, 2024, investors in the stock market are poised to closely monitor the unfolding political situation, anticipating its impact on investment decisions.
Analysts at Arif Habib Limited believe that the upcoming week may bring clarity to the political landscape, potentially boosting investor confidence.
The stock market is already in the midst of the ongoing result season, with particular stocks attracting attention due to their expected robust financial performance. Analysts note that several scrips are currently trading at attractive levels, presenting an enticing opportunity for investors seeking value.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a Price-to-Earnings Ratio (PER) of 4.1x (2024), compared to its 5-year average of 5.9x. The index is also offering a dividend yield of approximately 11.0 percent, surpassing its 5-year average of around 6.0 percent.
However, the local bourse faced pressure during the previous week amidst political uncertainty. The International Monetary Fund (IMF) rejecting the proposal related to curtailment of the stock of circular debt further dampened investor confidence. Additionally, the caretaker federal cabinet’s approval of a 12.3 percent weighted average hike in gas prices added to the challenges faced by the market.
Economic indicators for the week included a 3.4 percent year-on-year increase in Large Scale Manufacturing Industries (LSMI) output in December 2023. The prices of petroleum products also rose, with Motor Spirit (MS) increasing by PKR 2.73 and High-Speed Diesel (HSD) by PKR 8.37. On a positive note, remittances surged by 26 percent year-on-year, reaching USD 2.4 billion in January 2024. The State Bank of Pakistan’s reserves increased by USD 12 million, reaching USD 8.1 billion.
The local currency, PKR, closed at 279.36 against USD, weakening by PKR 0.08 (0.03 percent) week-on-week. The market closed at 59,872.96 points, declining by 3,071 points (4.9 percent) week-on-week. Sector-wise, negative contributions came from Oil & Gas Exploration Companies, Cement, Power Generation & Distribution, Oil & Gas Marketing Companies, and Commercial Banks. On the other hand, Textile Spinning made a positive contribution.
Scrip-wise negative contributors included OGDC, PPL, HUBC, PSO, and LUCK, while positive contributions came from EFERT, MCB, FATIMA, NATF, and AGP.
Foreign buying during the week amounted to USD 5.2 million, compared to a net buy of USD 5.7 million the previous week. Major buying was witnessed in Exploration & Production and other sectors. On the local front, selling was reported by Broker Proprietary Trading and Banks / DFI.
Average volumes for the week reached 350 million shares, up by 14.5 percent week-on-week, while the average value traded settled at USD 48 million, down by 3.6 percent week-on-week.
As investors brace for the upcoming week, the market remains sensitive to political developments, with the hope that increased clarity will bring stability and bolster investor confidence in the Pakistani stock market.
