Positive Sentiments Expected on PSX as New IMF Talks Approach

Positive Sentiments Expected on PSX as New IMF Talks Approach

Karachi, April 13, 2024 – The Pakistan Stock Exchange (PSX) is anticipated to witness a surge in positive sentiments next week as talks with the International Monetary Fund (IMF) regarding a loan program are set to commence.

Analysts at Arif Habib Limited have indicated that the market is poised to remain upbeat in the upcoming week. Anticipation surrounding discussions on State-Oriented Enterprises (SOEs) privatization and the Extended Fund Facility (EFF) program with the IMF are expected to bolster market sentiment.

Moreover, the commencement of the result season in the coming week is expected to bring certain scrips into the limelight, driven by expectations of robust financial performances. Additionally, stocks are currently trading at attractive levels, which could serve as a further incentive for investors.

The benchmark KSE-100 index of the Pakistan Stock Exchange is currently trading at a Price-to-Earnings Ratio (PER) of 4.2x (2024), compared to its 5-year average of 5.6x, offering a dividend yield of 10.3 percent, higher than its 5-year average of 7.6 percent.

The market maintained its upward trajectory throughout the 2-day working week (due to Eid-ul-Fitr holidays), settling at an all-time high level above 70,000 points. This positive sentiment was fueled by the agreement between Pakistan and Saudi Arabia to expedite the planned Saudi investment package for Pakistan worth USD 5 billion, announced during Prime Minister Shehbaz Sharif’s visit to KSA. Additionally, Pakistan’s government international bond of USD 1 billion is set to mature on April 15th, 2024.

Furthermore, remittances increased by 16 percent Year-over-Year (YoY) to reach USD 3.0 billion during March 2024, marking the highest remittances since April 2022. Additionally, the Pakistani Rupee (PKR) remained stable at 277.94 against the US Dollar (USD) throughout the week.

Overall, the market closed at 70,315 points, reflecting an increase of 1,898 points or 2.77 percent Week-over-Week (WoW).

Sector-wise, positive contributions were led by Commercial Banks (563 points), Fertilizer (344 points), Exploration & Production (E&P) (250 points), Power (179 points), and Oil Marketing Companies (OMCs) (106 points). Conversely, Automobile Parts (4 points) and Insurance (3 points) were the main sectors contributing negatively.

Among individual scrips, positive contributions were observed from Fauji Fertilizer Company (FFC) (352 points), Hub Power Company (HUBC) (176 points), Meezan Bank (MEBL) (172 points), United Bank Limited (UBL) (113 points), and MCB Bank (MCB) (89 points). Meanwhile, negative contributions came from Engro Corporation (ENGRO) (51 points), Dawood Hercules Corporation (DAWH) (45 points), Bank Alfalah (BAFL) (14 points), IGI Life Insurance (ILP) (5 points), and K-Electric (KEL) (5 points).

Foreign buying continued during the week, amounting to USD 4.2 million compared to a net buy of USD 3.9 million the previous week. Major buying was witnessed in the “All other sectors” category (USD 3.2 million) and Commercial Banks (USD 0.8 million). On the local front, selling was reported by Banks/Development Financial Institutions (DFIs) (USD 4.9 million) followed by Individuals (USD 3.2 million). Average volumes stood at 363 million shares (up by 18 percent WoW), while the average value traded settled at USD 59 million.

As the PSX prepares to enter a new week of trading, investors and market participants remain cautiously optimistic, with a keen eye on upcoming developments, particularly the IMF talks, which are expected to play a pivotal role in shaping market sentiment and direction.