Karachi, September 2, 2023 – Analysts suggest that the Pakistan Stock Market is likely to react to economic developments anticipated in the coming week.
Market observers believe that investors will closely monitor economic indicators, as these factors will play a pivotal role in shaping the market’s direction.
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Analysts at Arif Habib Limited highlight that economic developments and any decisions related to the upcoming general elections could have a substantial impact on the market’s momentum in the near future. Moreover, ongoing corporate results announcements are expected to keep certain sectors and individual stocks in the spotlight due to the anticipation of robust financial performance.
Currently, the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is trading at a Price-to-Earnings Ratio (PER) of 3.5x (2024), compared to its 5-year average of 5.8x. The market also offers a dividend yield of 11.2 percent, compared to its 5-year average of 6.7 percent.
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The market began the recent period with a degree of uncertainty driven by factors such as the upcoming general elections, macroeconomic concerns, currency devaluation, and inflation expectations. Additionally, market sentiment was affected by uncertainty regarding the potential announcement of emergency policies by the State Bank of Pakistan (SBP). During the week, SBP’s reserves decreased by USD 81 million, reaching USD 7.8 billion.
In terms of currency exchange rates, the Pakistani Rupee (PKR) depreciated against the US dollar, closing the week at PKR 305.47, losing PKR 4.46 (-1.5 percent) week-on-week.
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The market experienced a significant decline, with the KSE-100 index closing at 45,313 points, marking a drop of 2,359 points (-4.9 percent) week-on-week, the largest decline since November 26, 2021.
Sector-wise, negative contributions came from Commercial Banks (-524 points), Cement (-333 points), Oil & Gas Exploration Companies (-285 points), Technology & Communication (-247 points), and Fertilizer (-216 points). On the other hand, the Automobile Assembler sector made a positive contribution (5 points).
Among individual stocks, negative contributions were made by SYS (-186 points), HUBC (-159 points), PPL (-144 points), MEBL (-143 points), and LUCK (-141 points). Meanwhile, positive contributions were seen from HMB (21 points), INDU (15 points), SCBPL (8 points), AICL (6 points), and MTL (4 points).
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Foreigner buying continued during the week, amounting to USD 3.3 million, compared to a net buy of USD 1.7 million the previous week. Major buying was witnessed in Exploration and Production (USD 1.2 million) and Technology and Communication (USD 1.0 million). On the local front, selling was reported by Banks/DFIs (USD 6.3 million) followed by Broker Proprietary Trading (USD 3.4 million). Average trading volumes reached 235 million shares, up by 14 percent week-on-week, with the average value traded settling at USD 32 million, up by 15 percent week-on-week.
