Karachi, March 9, 2024 – The Pakistan Stock Market (PSX) is poised for a week of positive momentum as investors eagerly anticipate discussions with the International Monetary Fund (IMF).
Analysts at Arif Habib Limited predict that ongoing political developments and talks with the IMF, initiated following the formation of the new cabinet, will contribute to maintaining a positive market momentum in the upcoming week.
Investors are closely eyeing the resumption of the restructuring of State-Owned Enterprises (SOEs) and matters related to privatization, which are expected to be key areas of interest and potential drivers for the market.
The benchmark KSE-100 of PSX is currently trading at a Price to Earnings Ratio (PER) of 4.2x (2024), in contrast to its 5-year average of 5.9x. This offers a dividend yield of approximately 10.4 percent, compared to its 5-year average of around 7.7 percent.
The bullish momentum observed at the index during the opening bell of this week is attributed to renewed investor confidence following the formation of the new federal government. On the economic front, significant milestones include the Government of Pakistan raising PKR 527 billion through market treasury bills, demonstrating robust fiscal management.
Moreover, the textile sector saw a remarkable 20 percent Year-on-Year (YoY) increase in exports, reaching USD 1.4 billion in February 2024. During the same period, remittances surged by 13 percent YoY, totaling USD 2.2 billion. However, the State Bank of Pakistan (SBP) reserves witnessed a slight decline of USD 54 million Week-on-Week (WoW), settling at USD 7.9 billion. The Pakistani Rupee (PKR) closed at 279.04 against the USD, appreciating by PKR 0.15 or 0.055 percent WoW. Overall, the market closed at 65,794 points, registering an increase of 468 points or 0.7 percent WoW.
Sector-wise positive contributions came from Oil & Gas Exploration (217 points), Refinery (105 points), Fertilizer (76 points), Power Generation & Distribution (61 points), and Cement (61 points). Conversely, sectors that contributed negatively included Commercial Banks (210 points), Chemicals (23.11 points), and Tobacco (18 points).
Scrip-wise positive contributors featured DAWH (175 points), OGDC (164 points), PPL (89 points), HUBC (62 points), and NRL (46 points). On the flip side, negative contributions were noted from MEBL (93 points), FFC (65 points), HBL (47 points), BAHL (44 points), and ENGRO (42 points).
Foreign buying persisted throughout the week, totaling USD 6.3 million, compared to a net buy of USD 10.4 million the previous week. The major buying activity was witnessed in Commercial Banks (USD 7.9 million) and Fertilizer (USD 0.5 million). On the local front, selling was reported by companies (USD 6.8 million), followed by Insurance Companies (USD 0.7 million). Average volumes reached 425 million shares, up by 1.60 percent WoW, while the average value traded settled at USD 59 million, reflecting a 6.4 percent WoW increase.
As the week unfolds, the PSX is poised to react to IMF talks and other economic developments, with investors closely monitoring the unfolding events and their potential impact on the market. Stay tuned for updates as the stock market navigates through this dynamic period, balancing optimism and caution in the pursuit of profitable investments.