Karachi, August 17, 2024 – The Pakistan Stock Exchange (PSX) is likely to trade in positive territory in the upcoming week, starting from August 19, 2024, as market sentiment remains buoyant amid the ongoing corporate results season.
Analysts at Arif Habib Limited anticipate a continuation of this positive momentum at the PSX, supported by investor optimism around the potential outcomes of the International Monetary Fund (IMF) executive board meeting.
The benchmark KSE-100 index of the PSX is currently trading at a price-to-earnings ratio (PER) of 4.1x for 2025, significantly lower than its 5-year average of 5.9x. This discount offers a compelling dividend yield of approximately 10.4%, compared to its 5-year average of 8.2%.
The previous week saw the PSX experience a range-bound performance during its four trading days. The week kicked off on a positive note, driven by the MSCI review, which saw Pakistan’s weight in the Frontier Markets (FM) space increase to 3.9%. Additionally, the Government of Pakistan successfully raised PKR 119 billion through Ijarah Sukuk, surpassing its target of PKR 100 billion. Positive developments included a USD 119 million week-on-week increase in the State Bank of Pakistan’s reserves, bringing the total to USD 9.3 billion. Furthermore, Large Scale Manufacturing Index (LSMI) output for FY24 showed a year-on-year growth of 0.92%.
However, the PSX faced some headwinds, including a 21% year-on-year increase in the trade deficit to USD 2.0 billion during July 2024, and a marginal depreciation of the Pakistani Rupee (PKR) against the US Dollar, closing at 278.7. As a result, the KSE-100 index closed the week at 78,045 points, registering a loss of 525 points or -0.7% on a week-on-week basis.
Sector-wise, the Exploration and Production (E&P), Leather & Tanners, Fertilizers, Investment Banking, and Sugar sectors made positive contributions to the index. In contrast, the Cement, Banking, Power, Auto Assembler, and Auto Parts sectors were the main laggards.
On a scrip-wise basis, notable positive contributors included Mari Petroleum (MARI), MCB Bank (MCB), Pakistan Oilfields (POL), Fauji Fertilizer Company (FFC), and Javedan Corporation (JVDC). Conversely, Meezan Bank (MEBL), Lucky Cement (LUCK), Bank AL Habib (BAHL), Oil and Gas Development Company (OGDC), and Millat Tractors (MTL) dragged the index down.
Foreign investors remained active, with net buying clocking in at USD 5.26 million over four days, significantly up from last week’s USD 1.41 million. Key sectors attracting foreign interest included Fast-Moving Consumer Goods (FMCG) and Banks. Meanwhile, local investors, particularly companies and banks, were net sellers, offloading USD 4.4 million and USD 3.2 million, respectively. Average daily volumes for the week stood at 553 million shares, reflecting a 12.2% increase, while the average value traded rose by 1.1% to USD 75 million.
