Analysts at Arif Habib Limited have projected a continuation of positive market sentiments for the upcoming week starting May 13, 2024. With a series of significant events on the horizon, investors are expected to maintain a keen eye on developments that could potentially influence market dynamics.
One of the key factors contributing to the optimistic outlook is the anticipation surrounding a new IMF program. This program, along with potential investments from Saudi Arabia and Qatar, is poised to inject fresh momentum into the market. Additionally, market participants are eagerly awaiting the unveiling of the Federal Budget 2024-25, which is expected to provide further insights into the economic landscape and investment opportunities.
The current state of the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) reflects promising indicators. Trading at a Price-Earnings Ratio (PER) of 4.7x (2024), the index offers a dividend yield of approximately 9.7 percent, outperforming its five-year average. This favorable valuation is likely to attract investors seeking lucrative returns.
The previous week witnessed robust market sentiment, culminating in the index reaching an all-time high of 73,086 points. The arrival of Saudi investors to explore investment prospects across various sectors, including mining, agriculture, and IT, served as a catalyst for positive momentum. On the economic front, headline inflation moderated to 17.3 percent in April 2024, compared to 20.7 percent in the same period last year, potentially paving the way for a reduction in the policy rate during the upcoming Monetary Policy Committee (MPC) meeting.
Furthermore, indicators such as a significant year-on-year increase in remittances, coupled with a rise in State Bank of Pakistan (SBP) reserves by $1.1 billion to $9.1 billion, reflect a strengthening economic outlook. Despite marginal fluctuations, the Pakistani Rupee exhibited resilience, appreciating by PKR 0.09 against the US dollar.
Sector-wise performance played a crucial role in driving market gains, with notable contributions from Pharmaceuticals, Power, Technology, Leather & Tanneries, and Cable & Electrical Goods. However, the Energy and Petroleum (E&Ps) and Oil Marketing Companies (OMCs) sectors experienced negative contributions.
Scrip-wise, positive contributions were led by companies such as DAWH, SRVI, KAPCO, GLAXO, and HINOON, while others like EFERT, OGDC, MEBL, MARI, and PPL faced downward pressure.
Foreign investors continued to show interest in the Pakistani market, with net buying amounting to $2.7 million, primarily concentrated in the Fertilizer and Cement sectors. Conversely, local selling was reported by Other Organizations and Brokers.
The week also witnessed an uptick in trading volumes, with an average of 717 million shares exchanged, representing a 39 percent increase from the previous week. Meanwhile, the average value traded settled at $88 million, marking a 2.4 percent week-on-week increase.
As the market gears up for another week of trading, optimism prevails, fueled by anticipation of key developments and favorable economic indicators. With prudent investment strategies and a cautious approach, investors are poised to capitalize on emerging opportunities in the Pakistani stock market.
