Karachi, December 2, 2023 – The Pakistan stock market is gearing up for another week of positive momentum, with analysts forecasting a continued upswing starting December 4, 2023.
The optimism in the market is primarily driven by favorable indicators and the anticipated approval of a tranche by the International Monetary Fund (IMF) in the coming week.
Topline Securities analysts have reported a notable 4.4 percent week-on-week gain in the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX). This surge is largely attributed to sustained buying by foreign corporate entities and a further decline in T-Bill yields observed in the week’s auction. The diminishing yields have bolstered the belief that the market anticipates a future reduction in the policy rate.
The economic landscape during the outgoing week has been marked by key figures, including the National Accounts Committee (NAC) releasing quarterly GDP estimates for 1QFY24 at 2.13 percent. Additionally, the trade deficit for November 2023 narrowed to $1.888 billion, reflecting a significant 13 percent month-on-month reduction. Inflation, as measured by the Consumer Price Index (CPI), witnessed a slight uptick, with November’s figure standing at 29.2 percent year-on-year, compared to 26.9 percent in October 2023.
Investor confidence remains robust, as reflected in the consistently high participation in the market. The average daily traded volume reached an impressive 626 million shares, while the value of transactions amounted to Rs 23 billion. This heightened engagement underscores the growing interest and confidence among investors, further contributing to the positive sentiment prevailing in the market.
One of the key drivers of the market’s positive trajectory has been the continuous influx of foreign investment. Foreign corporate entities have shown a sustained interest in the Pakistani stock market, contributing significantly to the recent gains. The expectation of a tranche approval from the IMF in the upcoming week has further fueled this positive sentiment, as it is likely to inject additional liquidity and confidence into the market.
Analysts emphasize that the ongoing trend in the stock market is indicative of a broader economic recovery and positive investor sentiment. The alignment of factors such as foreign investment, declining T-Bill yields, and anticipated policy rate adjustments positions the market for sustained growth in the coming week.
However, analysts also caution investors to remain vigilant and closely monitor global economic developments, as external factors can influence market dynamics. Despite the positive outlook, uncertainties in the international arena could introduce volatility, necessitating a cautious approach.
As the Pakistan stock market continues its upward trajectory, market participants eagerly await the outcome of the IMF tranche approval, which could serve as a significant catalyst for sustained growth. The upcoming week holds the promise of further gains, with the market poised to build on its recent successes and solidify its position as a lucrative investment destination.
