Karachi, October 14, 2023 – Analysts at Arif Habib Limited anticipate that the Pakistan stock market is set to continue its positive momentum in the upcoming week, commencing on October 16, 2023.
This optimistic outlook is fueled by several factors that have contributed to the recent market upswing.
READ MORE: Pakistan Equity Market Gains 721 Points Amid Results Optimism
One key driver of this anticipated positive trend is the expectation of gas price adjustments to address the circular debt issues in the country. These adjustments are anticipated to have a favorable impact on investor sentiment.
Additionally, the market is expected to benefit from strong financial results from certain companies, which are likely to boost investor confidence and further propel the positive sentiment of the market.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) currently trades at a Price-to-Earnings Ratio (PER) of 3.9x for 2024, compared to its five-year average of 5.6x. This presents an attractive dividend yield of approximately 11.9 percent, compared to its five-year average of around 6.8 percent.
During the past week, the market achieved significant milestones by crossing the 49,000-point threshold, a level not seen since June 2017. This upward trend was driven by robust financial results that exceeded market participants’ expectations.
READ MORE: Pakistan Equities Maintain Bullish Trading, Gain 297 Points
Furthermore, Pakistan experienced a record-setting 27th consecutive session of strengthening the Pakistani Rupee (PKR) against the US Dollar (USD), which bolstered investor confidence.
In a notable development, Pakistan was granted a Generalized System of Preferences Plus (GSP+) extension for four years, adding to the positive economic outlook.
Auto sales numbers for August 2023 also showcased an impressive increase, with sales rising to 7.6 thousand units, marking a 49 percent month-on-month growth.
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Moreover, remittances for the month of September 2023 increased by 5 percent month-on-month, reaching USD 2.21 billion. Concurrently, the State Bank of Pakistan’s foreign exchange reserves rose by USD 31 million, reaching USD 7.6 billion as of October 6, 2023.
The Pakistani Rupee (PKR) strengthened against the greenback, closing at PKR 277.60, appreciating by PKR 5.07, or 1.83 percent, week-on-week.
At the end of the week, the market closed at 49,493 points, gaining 2,000 points, a significant 4.2 percent increase week-on-week. Sector-wise, positive contributions were led by Commercial Banks (498 points), Fertilizer (447 points), Exploration & Production (283 points), Power (250 points), and Cement (127 points). In contrast, the Technology sector saw a slight decline (79 points), as did the Chemical sector (21 points). Notable scrip-wise positive contributors included HUBC (182 points), FFC (178 points), PPL (151 points), UBL (123 points), and ENGRO (118 points). Conversely, negative contributions came from TRG (123 points), COLG (14 points), LOTCHEM (8 points), GHGL (5 points), and FCEPL (3 points).
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Foreigner buying was observed during the week, amounting to USD 1.41 million, in contrast to a net selling of USD 12.05 million in the previous week. Major foreign buying was concentrated in the Technology & Communication (USD 1.0 million) and Exploration and Production (USD 0.87 million) sectors. On the local front, selling was reported by the Insurance sector (USD 2.1 million) followed by individual investors (USD 2.0 million).
Average trading volumes increased by 29 percent week-on-week, with an average value traded of USD 36 million, reflecting a significant 38 percent increase week-on-week.
As Pakistan’s stock market continues to show resilience and remains an attractive destination for investors, the positive momentum is expected to persist, offering potential opportunities for market participants in the coming week.
