Karachi, March 22, 2025 – Analysts at Arif Habib Limited anticipate that the Pakistan Stock Exchange (PSX) will continue its bullish trend in the upcoming week starting March 24, 2025.
The optimism stems from the ongoing negotiations between the International Monetary Fund (IMF) and the Government of Pakistan, with expectations of a Staff-Level Agreement (SLA) keeping market sentiment upbeat.
The benchmark KSE-100 index of PSX is currently trading at a price-to-earnings ratio (PER) of 6.4x for 2025, which is lower than its 10-year average of 8.0x. Additionally, the dividend yield stands at approximately 8.1%, compared to the 10-year average of 6.5%, making valuations attractive for investors.
Market Performance and Key Drivers
During the past week, the KSE-100 index of PSX demonstrated significant strength, surpassing the 119,000 level intraday on Thursday. The rally was fueled by optimism regarding the IMF’s first review of the Extended Fund Facility (EFF) program, paving the way for the disbursement of the second tranche of USD 1.1 billion. Additionally, the IMF’s approval of recalibrating Pakistan’s tax collection target for FY25 to PKR 12.35 trillion (from PKR 12.97 trillion) contributed to positive market sentiment.
Other economic indicators also played a role in sustaining the momentum. The current account deficit declined sharply by 97% month-on-month (MoM) to USD 12 million in February 2025, while large-scale manufacturing (LSM) saw a 1.2% year-on-year (YoY) decline in January 2025. Furthermore, the State Bank of Pakistan (SBP) reserves increased by USD 49 million, reaching USD 11.1 billion.
Sector and Stock Performance
The rally in PSX was largely supported by key sectors:
• Exploration & Production (E&P) (+1,086 points)
• Technology (+416 points)
• Power (+273 points)
• Oil Marketing Companies (OMCs) (+213 points)
• Cement (+202 points)
Conversely, Fertilizer (-105 points) and Insurance (-6 points) weighed slightly on market performance.
Stock-wise, top contributors to PSX gains included:
• MARI (+696 points)
• SYS (+328 points)
• HUBC (+251 points)
• OGDC (+186 points)
• LUCK (+184 points)
On the downside, EFERT (-124 points), UBL (-60 points), FATIMA (-29 points), COLG (-18 points), and HBL (-16 points) were the major laggards.
Foreign and Local Investment Trends
Foreign investors continued to sell-off holdings at PSX, with net outflows totaling USD 7.96 million, compared to USD 2.61 million last week. The heaviest selling was seen in:
• Commercial Banks (USD 2.9 million)
• Exploration & Production (USD 2.3 million)
On the local front, banks and development finance institutions (DFIs) led the buying spree, investing USD 176.4 million, followed by other organizations with USD 1.5 million.
Trading Volume and Market Outlook
Market activity remained robust at PSX, with average daily volumes reaching 508 million shares, reflecting a 51% week-on-week (WoW) increase. Additionally, the average traded value stood at USD 112 million, up 43% WoW.
Analysts believe that PSX will continue its upward trajectory in the near term, with IMF negotiations, economic indicators, and corporate earnings shaping investor sentiment. However, any geopolitical or economic uncertainty could influence short-term market fluctuations.