Karachi, August 3, 2024 – The sentiments at Pakistan Stock Exchange (PSX) will heavily depend on corporate results during the next week starting August 5, 2024. Analysts at Arif Habib Limited forecast that the PSX would maintain a positive trajectory as certain scrips are anticipated to gain prominence amid expectations of robust results.
Key developments to monitor include progress on the reprofiling of existing debt and securing new funding commitments from Saudi Arabia, the UAE, and China. These are crucial for the approval of the IMF Extended Fund Facility (EFF) program.
The benchmark KSE-100 index of PSX is currently trading at a price-to-earnings ratio (PER) of 4.1x for 2025, compared to its 5-year average of 5.9x. The dividend yield stands at approximately 10.2%, compared to the 5-year average of around 8.2%.
The outgoing week commenced positively with the Monetary Policy Committee (MPC) meeting on Monday. The government announced a policy rate cut of 100 basis points (bps), bringing the interest rate down to 19.5%. This policy rate cut has been a significant boost to market sentiment.
Additionally, Fitch Ratings upgraded Pakistan’s credit rating from CCC to CCC+ due to an improved external funding outlook. The Consumer Price Index (CPI) for July 2024 stood at 11.1%, dropping to a 33-month low. However, Pakistan’s trade deficit in July 2024 increased by 19.7% year-on-year to USD 1.95 billion. Meanwhile, the State Bank of Pakistan (SBP) raised USD 141 billion through a Pakistan Investment Bond (PIB) auction. The yields on 3-year and 5-year PIBs declined by 36 bps and 15 bps, respectively. Furthermore, SBP reserves increased by USD 75 million, or 0.8% week-on-week, to USD 9.1 billion. The Pak Rupee remained stable against the USD at 278.5. The market closed at 78,226 points, an increase of 196 points or 0.3% week-on-week.
Sector-wise, positive contributions at thePSX came from Fertilizer (417 points), Refinery (68 points), Power (63 points), Exploration and Production (58 points), and Pharmaceuticals (36 points). Conversely, sectors that mainly contributed negatively included Cement (207 points), Banks (135 points), Technology (66 points), Oil Marketing Companies (26 points), and Textiles (21 points). Scrip-wise, positive contributors were FFC (479 points), POL (70 points), MEBL (49 points), ATRL (34 points), and SEARL (31 points). Meanwhile, scrip-wise negative contributions came from BAFL (104 points), DAWH (72 points), SYS (57 points), KOHC (51 points), and EFERT (43 points).
Foreign selling was observed during the week at the PSX, totaling USD 2.2 million, compared to a net buy of USD 4.6 million the previous week. Major foreign selling was witnessed in Foods & Personal Care (USD 1.9 million) and Fertilizer (USD 0.6 million). On the local front, buying was reported by Insurance (USD 1.8 million), followed by Individuals (USD 1.5 million). Average volumes stood at 356 million shares, up by 5.7% week-on-week, while the average value traded settled at USD 60.9 million, up by 8.4% week-on-week.
As the PSX looks forward to the upcoming week, corporate results will be the focal point for investors. The anticipated positive outcomes and key economic developments could set the tone for the market’s trajectory.
