Karachi, January 18, 2025 – The Pakistan Stock Exchange (PSX) is expected to sustain its positive momentum in the coming week, driven by certain scrips trading at attractive valuations.
Analysts at Arif Habib Limited predict that these undervalued stocks will continue to attract investor interest, alongside the upcoming result season, which is likely to spotlight scrips with anticipated strong financial performances.
The benchmark KSE-100 index of the PSX is currently trading at a price-to-earnings ratio (PER) of 6.1x for 2025, significantly lower than its 10-year average of 8.0x. Furthermore, the market is offering an attractive dividend yield of ~7.8%, surpassing its 10-year average of ~6.5%, making the PSX an appealing option for value-focused investors.
The past week at the PSX witnessed considerable volatility due to political uncertainties and rising crude oil prices. However, positive economic developments provided crucial support. Pakistan’s current account surplus for December 2024 reached USD 582 million, pushing the total surplus for 1HFY25 to USD 1.2 billion. Additionally, the cut-off yields in the PIB auction declined by 19-61 basis points, while the UAE rolled over USD 2 billion in deposits with the State Bank of Pakistan (SBP), stabilizing the country’s external account. SBP reserves also increased slightly, reaching USD 11.7 billion.
Despite challenges such as a 3.8% year-on-year decline in Large-Scale Manufacturing Industries (LSMI) output for November 2024, the KSE-100 index recorded a gain of 2,025 points (+1.8% week-on-week), closing at 115,272 points.
Sector-wise, the PSX saw positive contributions from commercial banks (+619 points), power generation (+357 points), pharmaceuticals (+320 points), cement (+199 points), and technology & communication (+195 points). Conversely, the sugar sector contributed negatively (-23 points). Scrips such as UBL (+427 points), HUBC (+360 points), and MARI (+120 points) drove the index upward, while OGDC (-64 points) and PPL (-53 points) were among the major laggards.
Foreign investors continued their selling spree at the PSX, recording net outflows of USD 8.7 million this week compared to USD 5.7 million last week. Banks and other sectors faced the bulk of this selling. On the local front, individuals and companies actively participated, with net buying of USD 12.8 million and USD 8.5 million, respectively.
As the PSX enters the result season, investors are optimistic about sustained gains, supported by improved economic indicators and attractive valuations.