Karachi, December 9, 2023 – The Pakistan stock market is anticipated to sustain its positive momentum into the next week, commencing December 11, 2023, according to analysts at Topline Securities Limited.
The optimistic outlook is underpinned by several factors, including the forthcoming monetary policy announcement and attractive scrip valuations that continue to attract investors.
Analysts predict that the monetary policy, set to be announced in the upcoming week, will likely keep the policy rate stable at 22 percent. This expectation, coupled with the appeal of scrips trading at enticing levels, is anticipated to contribute to the market’s favorable conditions. Additionally, historical data indicates that December has been a consistently positive month for the market, closing positively seven times in the past ten years.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a Price-to-Earnings Ratio (PER) of 4.4x (2024), compared to its 5-year average of 5.9x, offering a dividend yield of approximately 10.4 percent, higher than its 5-year average of around 6.0 percent.
This positive sentiment is further buoyed by the recent milestone achieved by the KSE-100 index, reaching an all-time high of 66,000 points during the current week. Analysts attribute this surge to robust market sentiment leading up to the scheduled IMF board meeting on January 11, 2024. Additionally, the agreement on investment modalities between Pakistan and Saudi Arabia, along with the prospects of a free trade agreement with the GCC, have contributed to the upbeat atmosphere.
In economic indicators, petroleum sales experienced a notable 9 percent Month-on-Month (MoM) increase in November 2023. Furthermore, urea and DAP offtake demonstrated healthy growth, recording 33 percent and 26 percent MoM increases, respectively. However, cement dispatches declined by 2 percent Year-on-Year (YoY) and 8 percent MoM in November 2023. The State Bank of Pakistan’s reserves decreased by USD 237 million, reaching USD 7 billion.
The Pakistani Rupee closed the week at PKR 283.87 against the US dollar, appreciating by PKR 1.09 or 0.38 percent Week-on-Week (WoW).
Closing at 66,224 points, the market saw an impressive 7.3 percent WoW increase, marking the highest ever weekly pointwise return. As a result, the KSE-100 became the world’s best-performing market on a weekly basis.
Sector-wise, positive contributions were led by Commercial Banks (1,704 points), Oil & Gas Exploration Companies (997 points), Fertilizer (387 points), Oil & Gas Marketing Companies (333 points), and Power Generation (166 points). Meanwhile, the negative contributions were primarily from the Automobile Assembler (19 points) and Cement (11 points) sectors.
Among individual stocks, positive contributors included PPL (388 points), HBL (320 points), OGDC (294 points), MARI (282 points), and BAHL (271 points). Conversely, negative contributions came from LUCK (70 points), MTL (26 points), SYS (7 points), IBFL (7 points), and FATIMA (5 points).
Foreign buying persisted during the week, totaling USD 11.2 million, compared to a net buy of USD 17.5 million the previous week. Noteworthy foreign purchases were observed in Banks (USD 4.3 million) and All Other Sectors (USD 2.4 million). On the local front, selling was reported by Banks and DFIs (USD 13.0 million) followed by Individuals (USD 3.7 million). Average trading volumes increased by 64 percent WoW, reaching 1,026 million shares, while the average value traded settled at USD 118 million, reflecting a 48 percent WoW increase.
