Karachi, February 3, 2024 – As Pakistan approaches its General Elections scheduled for February 8, 2024, investors at the Pakistan Stock Exchange (PSX) are bracing for a week of uncertainty and volatility.
Analysts at Arif Habib Limited anticipate the market to remain range-bound in the upcoming week, with investors closely monitoring the political landscape during the elections.
The week ahead poses challenges for investors, not only due to the elections but also with the limited number of trading days owing to public holidays. Despite these factors, the ongoing results season keeps certain stocks in the limelight, as investors anticipate robust financial performances.
Several stocks are currently trading at attractive levels, providing an enticing prospect for investors seeking potential opportunities. The benchmark KSE-100 index is presently trading at a Price-to-Earnings Ratio (PER) of 4.2x (2024), compared to its 5-year average of 5.9x. Additionally, it offers a dividend yield of approximately 10.6 percent, surpassing its 5-year average of around 6.0 percent.
During the previous week, the local bourse experienced a downtrend, influenced by political noise and uncertainty surrounding circular debt resolution. Meanwhile, the State Bank of Pakistan (SBP) decided to maintain the benchmark policy rate at 22 percent during the monetary policy committee meeting. In economic indicators, January 2024’s headline inflation marked a decline to 28.3 percent from 29.7 percent in December 2023.
Petroleum sales witnessed a 4 percent year-on-year decrease, while a growth of 12 percent was observed in other areas. The trade deficit for January 2024 reduced by 25 percent year-on-year, amounting to USD 1.9 billion. The SBP’s reserves also decreased by USD 54 million, reaching USD 8.2 billion. The Pakistani Rupee closed at 279.41 against the USD, strengthening by PKR 0.18 | 0.07 percent week-on-week. The market concluded at 63,003 points, witnessing a decline of 810 points | -1.3 percent week-on-week.
Sector-wise, negative contributions emanated from Fertilizer (181 points), Oil & Gas Marketing Companies (130 points), Chemical (121 points), Technology & Communication (86 points), and Power Generation & Distribution (66 points). Positive contributions were made by Automobile Assembler (88 points), Cable & Electrical Goods (7 points), Insurance (7 points), and Pharmaceuticals (3 points).
Scrip-wise, negative contributors included COLG (105 points), MARI (94 points), PPL (80 points), EFERT (77 points), and PSO (64 points). Positive contributions were noted from OGDC (122 points), MTL (80 points), MCB (78 points), BAFL (22 points), and AKBL (8 points).
Foreign selling persisted during the week, amounting to USD 9.7 million, compared to a net sell of USD 22.7 million the previous week. Major selling activities were observed in Commercial Banks (USD 2.7 million) and Cement (USD 2.2 million). On the local front, buying was reported by Insurance Companies (USD 7.0 million), followed by Broker Proprietary Trading (USD 1.5 million).
Despite the challenges and uncertainties in the market, investors remain cautiously optimistic, strategically positioning themselves as they await the outcome of the General Elections and navigate the economic landscape in the coming weeks.
