Karachi, March 8, 2025 – The Pakistan Stock Exchange (PSX) is expected to maintain its positive momentum in the upcoming week, driven by key economic developments and investor optimism, analysts said.
According to experts at Arif Habib Limited, the PSX is likely to sustain its upward trajectory, particularly with the Monetary Policy Committee (MPC) meeting scheduled for Monday. Market expectations suggest that the MPC may opt for a 50 basis points (bps) rate cut, bringing the policy rate down to 11.5%, which could further fuel investor confidence. Additionally, the ongoing International Monetary Fund (IMF) mission and the first review of the bailout program are expected to provide further support to market sentiment.
The benchmark KSE-100 index is currently trading at a price-to-earnings ratio (PER) of 6.3x for 2025, compared to its 10-year average of 8.0x. Furthermore, it offers an attractive dividend yield of ~8.3%, significantly higher than the 10-year average of ~6.5%. These valuations continue to make the PSX an attractive investment destination.
The PSX concluded the previous week on a strong note, supported by improved domestic liquidity and renewed confidence following discussions on the IMF’s first review under the $7 billion Extended Fund Facility (EFF).
On the macroeconomic front, inflation in February 2025 dropped to a 113-month low of 1.5% YoY, the lowest reading since September 2015 (1.3%). Additionally, in a recent T-Bill auction, 3-month yields remained unchanged, while 6-month and 12-month papers saw a minor decline of 1bps each.
For 8MFY25, the trade deficit widened by 6.3% YoY to $15.8 billion. On the positive side, OMC sales increased by 4% YoY, although urea and DAP sales declined by 37% and 64% YoY, respectively.
Meanwhile, the State Bank of Pakistan’s foreign exchange reserves saw a weekly increase of $27 million, reaching $11.2 billion, while the PKR depreciated slightly by 0.05%, closing at 279.82 against the USD. The KSE-100 index ended the week at 114,399 points, marking a WoW gain of 1,147 points or 1.01%.
Sector-wise, PSX gains were led by E&Ps (656 points), Cements (451 points), OMCs (346 points), Power (177 points), and Glass (114 points). Conversely, negative contributions came from Technology & Communication (122 points), Textile (97 points), Autos (89 points), and Commercial Banks (48 points).
Key individual contributors included PPL (+290 points), PSO (+247 points), OGDC (+236 points), HUBC (+185 points), and FCCL (+156 points), while SYS (-84 points), MTL (-77 points), MEHT (-75 points), BAHL (-74 points), and UBL (-64 points) posted negative impacts.
Foreign investors remained net sellers, offloading $5.3 million worth of stocks, compared to $6.0 million last week. The majority of selling was seen in E&Ps ($2.7 million) and Commercial Banks ($2.3 million). On the local front, Banks/DFIs ($43.4 million) and Companies ($7.5 million) emerged as net buyers.
Trading activity at the PSX saw a decline, with average volumes dropping by 41% WoW to 291 million shares, while the average traded value fell by 24.2% WoW to $65 million.
