Karachi, May 18, 2024 – Analysts at Arif Habib Limited have forecasted that Pakistan stock market is set to observe another positive week starting May 20, 2024.
This optimism stems from the ongoing positive momentum in the market, buoyed by several key factors that investors are keenly monitoring.
As the market participants gear up for the week, all eyes are on the developments related to the upcoming Federal Budget 2024-25, the potential new International Monetary Fund (IMF) program, and anticipated investments from friendly countries. These elements are expected to play a crucial role in shaping the market’s trajectory.
Currently, the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is trading at a price-to-earnings ratio (PER) of 4.8x for 2024, compared to its 5-year average of 6.1x. This presents a lucrative dividend yield of approximately 9.5%, significantly higher than its 5-year average of around 7.3%.
The market sentiment has remained buoyant throughout the past week, culminating in the KSE-100 index closing at an all-time high of 75,342 points. This robust performance is attributed to optimism surrounding the potential negotiation of a new IMF package.
On the economic front, there have been notable developments. The Large Scale Manufacturing Index (LSMI) output saw a year-on-year increase of 2% in March 2024, though it declined by 9.35% month-on-month. Additionally, Pakistan posted a current account surplus of USD 491 million in April 2024. The yields in the secondary market witnessed a day-on-day decline across all tenors, with a significant 62 basis points drop in 12-month T-bills. This decline is in anticipation of a potential rate cut in the June 2024 monetary policy committee meeting. Furthermore, the State Bank of Pakistan (SBP) reserves reported an increase of USD 15 million, bringing the total to USD 9.1 billion. The Pakistani Rupee, however, depreciated slightly by PKR 0.09 or 0.03% week-on-week, settling at 278.21 against the US Dollar. Despite this, the KSE-100 index gained 2,257 points, an increase of 3.09%, reaching 75,342 points.
Sector-wise, the positive contributors included Commercial Banks (adding 1,076 points), Exploration & Production (396 points), Fertilizer (196 points), Automobile Parts & Accessories (102 points), and Engineering (72 points). Conversely, sectors that contributed negatively were Cable & Electrical Goods (34 points), Power (23 points), and Textile Composite (20 points).
On the scrip-wise front, the top positive contributors were United Bank Limited (UBL) with 304 points, Pakistan Oilfields Limited (POL) with 201 points, MCB Bank (MCB) with 184 points, Meezan Bank Limited (MEBL) with 183 points, and Bank Al-Habib Limited (BAHL) with 158 points. On the other hand, the major scrip-wise negative contributors included Pak Elektron Limited (PAEL) with 34 points, TRG Pakistan Limited (TRG) with 25 points, Fauji Cement Company Limited (FCCL) with 20 points, Pakistan State Oil (PSO) with 19 points, and D.G. Khan Cement (DGKC) with 17 points.
Foreign investor interest remained strong this week, with net buying amounting to USD 14.94 million compared to USD 2.73 million the previous week. Significant foreign buying was seen in Banks (USD 6.54 million) and Exploration & Production (USD 4.52 million). Locally, Banks/Development Finance Institutions (DFIs) were the major sellers, offloading USD 9.85 million worth of shares, followed by individual investors who sold USD 2.46 million.
Average trading volumes for the week stood at 555 million shares, a 23% decrease week-on-week, while the average value traded was USD 79 million, down by 10% week-on-week.
As the new week approaches, the market is poised to continue its positive trend, driven by economic optimism and investor confidence in the upcoming financial policies and international support.
