Karachi, August 12, 2023 – Pakistan stocks market poised for a significant uptick in the upcoming week, as analysts predict a surge in bullish sentiment driven by the recent upward revision of Pakistan’s weight in the MSCI index.
Arif Habib Limited, a prominent financial firm, anticipates strong interest from foreign investors in the local bourse as Pakistan’s representation in the MSCI index grows.
READ MORE: Pakistan Equities Soar with a 616-Point Gain Following MSCI Rebalancing
The benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) is currently trading at a price-to-earnings ratio (PER) of 3.9x (2024), notably lower than its 5-year average of 5.8x. Additionally, the dividend yield stands at an attractive 10.3 percent, compared to its 5-year average of approximately 6.7 percent.
The market witnessed a mixed trend during the past week, with positive sentiment maintained due to the resolution of the gas circular debt through a dividend plough-back scheme and the approval of a refinery policy. Furthermore, Pakistan’s weight in the MSCI FM index was significantly revised upwards, from around 0.6 percent to approximately 2.7 percent, further boosting market confidence.
READ MORE: MSCI Adds 15 Pakistani Stocks to Frontier Index, Signaling Growing Interest
Despite these positive developments, the State Bank of Pakistan’s (SBP) reserves experienced a decrease of USD 110 million, bringing the total to USD 8 billion. Additionally, the Pakistani Rupee (PKR) depreciated against the US Dollar (USD), closing at PKR 288.49, reflecting a loss of PKR 1.53 or 0.5 percent week-on-week (WoW). The overall market closed at 48,424 points, witnessing a marginal decline of 161 points, representing a 0.3 percent decrease WoW.
READ MORE: Pakistan Stocks Dip By 419 Points Amid Interim Setup Uncertainty
Sector-wise, negative contributions came from the Technology sector (157 points), Exploration & Production (E&Ps) sector (116 points), Oil Marketing Companies (OMCs) sector (87 points), Refinery sector (73 points), and Chemical sector (56 points). Conversely, the Fertilizer sector (264 points) and the Banking sector (153 points) contributed positively. Among individual stocks, negative contributions were notable from SYS (92 points), OGDC (77 points), PPL (66 points), PSO (53 points), and TRG (51 points). On the positive side, DAWH (181 points), UBL (96 points), ENGRO (93 points), MCB (58 points), and LUCK (38 points) made significant contributions.
READ MORE: Bullish Trend Dominate on Last Day of Government as KSE-100 Index Gains 798 Points
Foreign investors continued their buying spree, with a net purchase of USD 2.9 million during the week, compared to a net buy of USD 5.3 million in the previous week. Notably, major buying activity was observed in the Commercial Banks (USD 1.8 million) and Exploration & Production (USD 1.5 million) sectors. On the local front, selling was reported by Banks and Development Financial Institutions (DFIs) (USD 6.9 million), followed by Mutual Funds (USD 5.9 million).
The weekly trading activity saw a decrease in average volumes, reaching 344 million shares, a 30 percent decline WoW, while the average value traded settled at USD 50 million, down by 17 percent WoW. Â Overall, market participants are looking forward to a bullish week ahead, driven by the positive MSCI revision and expectations of robust sectoral performance.
