Karachi, October 7, 2023 – Analysts at Arif Habib Limited are projecting that the Pakistan stock market is likely to maintain its positive momentum in the upcoming week, starting October 9, 2023.
As the result season begins next week, specific stocks are expected to garner significant attention.
One of the key factors influencing market sentiment is the persistent call by the International Monetary Fund (IMF) for gas price adjustments to address the circular debt issue. Market experts anticipate that the caretaker government will implement a gas price hike soon.
READ MORE: Pakistan Equities Make Nominal Gain on Last Weekly Trading Session
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a Price-to-Earnings Ratio (PER) of 3.7x (2024), compared to its five-year average of 5.7x. This offers a dividend yield of approximately 11.7%, compared to its five-year average of approximately 6.8%.
The market embarked on a positive trajectory this week, driven by a 42% year-on-year (YoY) reduction in the trade deficit to USD 5.3 billion in the first quarter of fiscal year 2024 (1QFY24). Additionally, market participants are optimistic about robust results for 1QFY24. Key sectors such as urea and DAP sales experienced notable increases of 11% and 68% YoY, respectively, in September 2023. Cement dispatches in 1QFY24 reported a 23% YoY increase. Furthermore, the cut-off yields of 3-month T-Bills and 3-year Pakistan Investment Bonds (PIB) declined by 29 basis points and 15 basis points, respectively, in the auction held this week. However, inflation rose to 31.4% in September 2023.
READ MORE: Pakistan Stock Market Rises 372 Points as Global Oil Prices Decline
Despite the inflationary concerns, the ongoing decline in international oil prices and the consistent appreciation of the Pakistani Rupee (PKR) against the US Dollar have alleviated some investor apprehensions. Both factors are expected to provide a much-needed cushion. The PKR closed at PKR 282.69 against the greenback, appreciating by PKR 5.05 (+1.8%) week-on-week. The market concluded the week at 47,494 points, registering a gain of 1,261 points (+2.7%) week-on-week.
In terms of sector-wise contributions, notable positive impacts came from:
Commercial Banks (413 points)
Fertilizer (281 points)
Cement (176 points)
Power (81 points)
Technology (77 points)
Conversely, the sectors that made negative contributions were:
READ MORE: Pakistan Stocks Surge by 323 Points Amid Expectations of Strong Banking Sector Profits
Exploration and Production (E&Ps) (48 points)
Miscellaneous (14 points)
Among individual stocks, the following made significant positive contributions:
EFERT (108 points)
ENGRO (102 points)
HBL (95 points)
MCB (89 points)
MEBL (79 points)
On the flip side, the following stocks had negative contributions:
MARI (23 points)
PPL (17 points)
PSEL (16 points)
PAKT (7 points)
AICL (6 points)
Foreign selling activity was observed during the week, totaling USD 12.05 million, in contrast to a net buy of USD 0.19 million in the previous week. Major selling was concentrated in Commercial Banks (USD 8.86 million) and other sectors (USD 2.61 million). Locally, buying was reported by Banks/Development Financial Institutions (DFIs) (USD 13.61 million), followed by Companies (USD 2.1 million). Average trading volumes reached 291 million shares, marking a 44% week-on-week increase, while the average traded value settled at USD 26 million, reflecting a 15% week-on-week rise.
READ MORE: Pakistan Stock Market Extends Gains, Closing Up 130 Points
In other significant news:
In September 2023, petroleum products’ sales witnessed a 31% YoY decline to 1.06 million tons.
WTL achieved a major milestone with its listing on NASDAQ.
Distribution Companies (Discos) are set to charge an additional Rs1.7 per unit for electricity in October.
The State Bank of Pakistan’s forex reserves decreased by $21 million to $7.615 billion.
Textile exports continued to decline for the 12th consecutive month.
As the market prepares for the upcoming week, investors will closely monitor the implementation of gas price adjustments and the release of corporate results, which are expected to play a pivotal role in shaping market dynamics.
