Karachi, October 21, 2023 – The Pakistan stock market is poised to maintain its recent positive momentum as it heads into the week starting October 23, 2023.
Analysts at Arif Habib Limited have conducted an analysis, indicating that the market is likely to continue its upward trajectory, driven by several factors that are generating optimism among investors.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) has recently achieved a significant milestone by crossing the 50,000 points threshold, a level not seen in six years. This bullish trend is being attributed to various favorable economic conditions, including a robust national economy, stabilized interest rates, controlled inflation, a strong currency, and impressive corporate earnings.
The market’s current price-to-earnings ratio (PER) stands at 4.0x (2024), compared to its five-year average of 5.6x. Additionally, it offers a dividend yield of approximately 11.9 percent, exceeding its five-year average of approximately 6.8 percent. These metrics make the market an attractive prospect for both local and foreign investors.
On the economic front, several positive indicators include a substantial 98 percent year-on-year decrease in the Current Account Deficit for September 2023, as well as a 2.5 percent year-on-year increase in the output of Large Scale Manufacturing Industries (LSMI) for August 2023, according to data from the Pakistan Bureau of Statistics (PBS).
Furthermore, government securities’ recent auction saw declining cut-off yields for 3-month, 6-month, and 12-month instruments, boosting investor sentiment. The State Bank of Pakistan (SBP) reported an increase in forex reserves by USD 67 million, reaching USD 7.7 billion as of October 6th, 2023. The Pakistani Rupee closed the week at PKR 278.8 against the US dollar.
During the past week, the market gained 1,238 points, equivalent to a 2.5 percent increase week-on-week. Positive sector-level contributions came from Commercial Banks, Fertilizer, Power, Cement, and Exploration & Production (E&P). Notable individual stocks contributing positively included HUBC, ENGRO, PPL, MCB, and PSO, while Unity Foods, Dawood Hercules, Pakistan Telecommunication Company Limited, Mughal Iron & Steel Industries, and Rehman Medical Institute made negative contributions.
Foreign investor activity was noteworthy, with total net buying of USD 2.3 million, compared to net buying of USD 1.4 million in the previous week. Domestic selling activities were reported by Banks and Development Financial Institutions (DFIs) and Mutual Funds.
Average trading volume for the week increased by 8 percent week-on-week to 405 million shares, while the average traded value rose by 13 percent week-on-week to USD 45 million.
In addition to these market developments, several other significant news items made headlines during the week, including increased IMF funding commitments, production suspensions by Lotte Chemical, Honda Atlas, and Pak Suzuki, a surge in cement exports, and an agreement by Karachi Electric (KE) to double the national grid supply.
As the Pakistan stock market sustains its positive momentum, investors and stakeholders remain watchful, taking into account both domestic and international factors that could influence market dynamics in the coming week.
READ MORE: Pakistan Stocks Gain 367 Points as Strong Corporate Results Attract Investors
