As the new trading week kicks off on April 8, 2024, Pakistani stocks are anticipated to retain their positive trajectory, buoyed by improved sentiments surrounding recent economic developments.
Analysts at Arif Habib Limited have expressed optimism regarding the market outlook for the upcoming week. They predict continued positivity, citing potential developments related to the privatization of State-Owned Enterprises (SOEs) and the Extended Fund Facility (EFF) program with the International Monetary Fund (IMF) as factors that could enhance market sentiment.
Additionally, investors are eyeing the commencement of the result season, anticipating strong performances from select stocks. The market remains attractive for investment, with stocks trading at appealing levels, likely to attract further investor interest.
Currently, the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is trading at a Price-to-Earnings Ratio (PER) of 4.2x (2024), compared to its five-year average of 5.6x. Furthermore, it offers a dividend yield of 10.3 percent, surpassing its five-year average of 7.6 percent.
During the previous four-day trading week, the market maintained its positive momentum, with the KSE-100 index surging from 67,005 to 68,416, reaching an all-time high. This surge was fueled by encouraging inflation figures and expectations of an interest rate reversal.
The headline inflation rate for March 2024 stood at 20.7 percent year-on-year, marking a decline from the previous month’s rate of 23.1 percent. Additionally, Treasury bill cut-off yields remained stable in the 3-month and 12-month tenors, while registering a modest increase in the 6-month tenor. Petroleum sales witnessed a notable jump of 4 percent year-on-year and 3 percent month-on-month.
Sector-wise, positive contributions were observed from Fertilizer, Commercial Banks, Exploration & Production (E&P), Cement, and Pharmaceuticals. Conversely, the Chemical and Paper & Board sectors made negative contributions.
Among individual stocks, positive contributions were led by DAWH, ENGRO, EFERT, PPL, and SYS, while negative contributions were primarily from PTC, PAKT, COLG, PKGS, and MARI.
Foreign buying continued during the week, totaling USD 3.9 million compared to a net buy of USD 3.6 million in the previous week. Notable buying activity was witnessed in Commercial Banks and Fertilizer sectors.
On the local front, selling was predominantly reported by Insurance Companies, followed by Broker Proprietary traders.
Despite a slight decrease in average volumes, which stood at 307 million shares, and the average value traded settling at USD 42 million, market sentiment remains positive as investors navigate the evolving economic landscape.
With continued optimism surrounding economic reforms and favorable market conditions, Pakistani stocks are poised to sustain their positive momentum in the week ahead.
