Karachi, November 18, 2023 – Financial analysts at Arif Habib Limited are optimistic about the Pakistan stock market maintaining its bullish momentum in the week starting November 20, 2023.
The market is poised to witness continued positivity, with a keen eye on the approval of the second tranche disbursement by the Executive Board of the International Monetary Fund (IMF).
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is presently trading at a Price-to-Earnings Ratio (PER) of 4.4x (2024), notably lower than its 5-year average of 5.7x. This presents an attractive dividend yield of approximately 10.2 percent, exceeding the 5-year average of around 6.7 percent.
The market exhibited a bullish trend throughout the current week, culminating in a new high of 57,397 points. This surge was underpinned by a staff-level agreement between Pakistan and the IMF, marking a significant step toward the disbursement of the awaited second tranche, totaling USD 700 million, contingent on the approval of the Executive Board.
In addition to positive developments with the IMF, the inflows under Roshan Digital Accounts (RDAs) climbed to USD 6.9 billion in October 2023, up from USD 6.7 billion in the previous month. Concurrently, the cut-off yields for the 3-month, 6-month, and 12-month Treasury bills recorded declines of 45 basis points, 49 basis points, and 50 basis points, respectively.
Nevertheless, the reserves of the State Bank of Pakistan (SBP) experienced a decrease of USD 115 million, settling at USD 7.4 billion. The Pakistani Rupee closed the week at 286.49 against the US Dollar, appreciating by 0.54 percent week-on-week.
Closing the week at 57,063 points, the market demonstrated an overall increase of 1,671 points, reflecting a substantial 3.0 percent week-on-week growth.
Sector-wise, positive contributions were led by Oil & Gas Exploration Companies (394 points), Oil & Gas Marketing Companies (248 points), Technology & Communication (212 points), Power Generation and Distribution (145 points), and Food & Personal Care Products (126 points). Conversely, Commercial Banks (79 points), Cement (37 points), and Refinery (7 points) were the primary sectors contributing negatively.
The top-performing stocks included PPL (201 points), PSO (161 points), OGDC (145 points), SYS (108 points), and MTL (92 points). On the flip side, MEBL (72 points), LUCK (63 points), BAFL (60 points), RMPL (25 points), and CHCC (18 points) were the major detractors.
Foreign buying remained robust during the week, totaling USD 8.2 million, a notable increase from the net buy of USD 1.3 million in the previous week. Power (USD 3.8 million) and Oil Marketing Companies (OMCs) (USD 2.7 million) witnessed substantial foreign investment. Locally, selling was primarily attributed to Banks and DFIs (USD 9.1 million) and Insurance Companies (USD 2.6 million).
Average trading volumes reached 761 million shares, marking a 40 percent week-on-week increase, while the average value traded settled at USD 82.5 million, up by 22 percent week-on-week. The upcoming week holds promise for investors, with positive indicators shaping the market’s trajectory.
