Karachi, May 25, 2024 – The Pakistan Stock Exchange (PSX) is expected to maintain its bullish momentum in the upcoming week starting May 27, 2024, according to analysts at Arif Habib Limited.
The brokerage house anticipates sustained upward momentum, buoyed by several positive economic developments and market dynamics.
“We foresee a sustained upward momentum in the forthcoming week,” noted Arif Habib Limited in their recent report. This optimistic outlook is primarily driven by the initiation of a new program with the International Monetary Fund (IMF), which is poised to significantly enhance investor sentiment at PSX.
Additionally, investors are keenly watching progress related to the Federal Budget 2024-25 and potential investments from the UAE and Saudi Arabia. Both nations are expected to contribute significantly to market optimism, with the UAE already agreeing to invest USD 10 billion in Pakistan, further bolstering market confidence.
Currently, the benchmark KSE-100 index is trading at a price-to-earnings ratio (PER) of 4.8x for 2024, compared to its five-year average of 6.1x. The index offers a dividend yield of approximately 9.5 percent, higher than its five-year average of 7.3 percent. This attractive valuation, coupled with high dividend yields, continues to draw investor interest.
The PSX closed the past week at an all-time high of 75,983 points, driven by encouraging talks with the IMF and significant investment commitments from the UAE. Market sentiment was also buoyed by economic data showing gross inflows of USD 171 million in Roshan Digital Accounts (RDA) for April 2024. Additionally, the government raised PKR 96.88 billion through a Pakistan Investment Bond (PIB) auction, with cut-off yields for three-year, five-year, and ten-year bonds reduced marginally, indicating positive market conditions.
Despite a slight depreciation of the Pak Rupee by PKR 0.10 (0.035 percent) week-on-week, ending at 278.3 against the US dollar, the KSE-100 index gained 641 points (0.85 percent) to close at 75,983 points. Sector-wise, the most significant positive contributions came from Power Generation & Distribution (174 points), Technology & Communication (139 points), Leather & Tanneries (52 points), Commercial Banks (39 points), and Investment Banks (17 points). Conversely, sectors such as Fertilizer (-185 points) and Cement (-161 points) contributed negatively.
On a scrip-wise basis, positive contributors included MEBL (172 points), SYS (141 points), PKGP (98 points), KEL (59 points), and SRVI (52 points). In contrast, MCB (-145 points), ENGRO (-114 points), DAWH (-107 points), POL (-53 points), and THALL (-52 points) were notable negative contributors.
Foreign investor activity saw net selling of USD 12.08 million this week, a reversal from a net buy of USD 14.94 million the previous week. Major selling was observed in Debt (USD 16.55 million) and Technology (USD 0.63 million). On the local front, significant buying was reported by Banks / DFIs (USD 10.44 million) and Insurance Companies (USD 5.31 million). Average trading volumes increased by 0.7 percent week-on-week to 558 million shares, while the average value traded settled at USD 64.8 million.
As the new week approaches, all eyes will be on PSX’s performance, with the market’s bullish trend expected to continue amid favorable economic indicators and investor sentiment.
