Karachi, December 28, 2024 – The Pakistan Stock Exchange (PSX) is poised to sustain its positive trajectory in the coming week, fueled by fresh liquidity inflows associated with the “January effect.” Analysts at Arif Habib Limited have expressed optimism that the PSX will continue its upward momentum, bolstered by attractive valuations and renewed investor confidence.
Currently, the benchmark KSE-100 index of PSX is trading at a price-to-earnings ratio (PER) of 6.0x for 2025, compared to its 10-year average of 8.2x. Additionally, the index offers an appealing dividend yield of approximately 8.0%, significantly higher than its 10-year average of ~6.5%. These factors are expected to encourage further investments and strengthen the market’s recovery.
The week began with a historic surge as the KSE-100 index gained an impressive 4,411.3 points on Monday, marking the second-highest single-day increase in its history. This remarkable rally was driven by fresh liquidity following a sharp correction in the previous week. However, as the week progressed, market sentiment remained mixed. In the T-bill auction, the State Bank of Pakistan (SBP) raised PKR 913 billion, falling short of the PKR 1,200 billion target. The cut-off yields for 3-month, 6-month, and 12-month T-bills were set at 11.99%, 11.99%, and 12.29%, respectively.
On the external front, SBP’s reserves declined by USD 228 million week-on-week, closing at USD 11.9 billion. Meanwhile, the PKR depreciated by 0.22% week-on-week, ending the week at 278.47 against the US dollar. Despite these challenges, the PSX ended the week on a positive note, with the KSE-100 index closing at 111,351 points, reflecting a weekly gain of 1,838 points (+1.68% WoW).
Sector-wise, the positive contributions to the PSX came from i) Commercial banks (781 points), ii) Fertilizer (456 points), iii) OMCs (337 points), iv) Technology & Communication (228 points), and v) Oil & Gas Exploration (54 points). Conversely, Cement (-188 points), Power (-102 points), and Textile Composite (-33 points) contributed negatively. Key scrip-wise contributors included UBL (439 points), DAWH (314 points), ENGRO (262 points), TRG (226 points), and PSO (213 points), while FFC (-252 points), LUCK (-105 points), and SYS (-92 points) weighed down the index.
Foreigners sold equities worth USD 6.8 million this week compared to USD 11.6 million last week. Major selling was observed in Banks (USD 4.7 million), followed by all other sectors (USD 2.0 million). On the local front, individuals and Banks/DFIs emerged as net buyers, with inflows of USD 14.9 million and USD 4.8 million, respectively. Average trading volumes at PSX stood at 796 million shares (down 31% WoW), while the average value traded declined by 25% to USD 154 million.
