Karachi, January 20, 2024 – The Pakistan Stock Exchange (PSX) is set to be influenced by the impending financial results of leading corporate entities as the new week commences on January 22, 2024.
Analysts from Arif Habib Limited anticipate a positive trajectory for the benchmark KSE-100 index, citing favorable expectations surrounding quarterly results that will be closely scrutinized by investors.
The market is also poised for a significant event as the government is scheduled to conduct an auction for Ijarah Sukuk on January 23, 2024, at the PSX, targeting an ambitious amount of Rs 100 billion. This move, coupled with stocks trading at attractive valuations, is expected to further bolster positive sentiment at the index.
Currently, the KSE-100 is trading at a Price to Earnings Ratio (PER) of 4.3x (2024), compared to its 5-year average of 5.9x, offering a noteworthy dividend yield of approximately 10.5 percent, exceeding its 5-year average of 6.0 percent.
The past week witnessed a subdued local bourse, attributed to political uncertainty and tensions along the western border, sparking panic in the market. However, the State Bank of Pakistan (SBP) reported inflows of USD 706 million following the successful completion of the first review by the International Monetary Fund (IMF). The SBP reserves are anticipated to reach USD 8.9 billion next week. Additionally, the United Arab Emirates (UAE) rolled over USD 2 billion for another year, maturing in Jan’24. Furthermore, November 2023 saw a growth of 1.6 percent Year-on-Year (YoY) in Large Scale Manufacturing (LSM), and Pakistan posted a Current Account surplus of USD 397 million in December 2023. Net Foreign Direct Investment (FDI) witnessed a robust growth of 35 percent YoY, settling at USD 863 million in 1HFY24.
In a significant development, Pakistan and Dubai inked an investment agreement exceeding $3 billion, encompassing collaboration in railways, economic zones, and infrastructure development. However, the SBP’s reserves experienced a decline by USD 127 million last week, reaching a total of USD 8 billion. The Pakistani Rupee (PKR) closed the week at 280.36 against the USD, appreciating by +0.5 | 0.16 percent Week-on-Week (WoW). The overall market concluded at 63,282 points, marking a decrease of 1,355 points or -2.1 percent WoW.
Sector-wise negative contributions were notable in Cement (230 points), Oil & Gas Exploration Companies (222 points), Power Generation & Distribution (148 points), Automobile Assemblers (82 points), and Miscellaneous (78 points). Conversely, Fertilizer (42 points) emerged as a positive contributor to the sector. Scrip-wise, negative contributions were led by PPL (234 points), LUCK (103 points), HUBC (100 points), MTL (91 points), and HBL (68 points), while positive contributions came from ENGRO (104 points), MEBL (54 points), MARI (45 points), UBL (39 points), and POL (31 points).
Foreigner selling was observed during the week, amounting to USD 1.19 million, compared to a net buy of USD 1.88 million the previous week. Major selling occurred in Banks (USD 2.6 million) and Exploration & Production companies (USD 1.4 million). On the local front, buying was reported by Insurance (USD 11.5 million), followed by Companies (USD 1.8 million). Average volumes stood at 389 million shares (down by 30.5 percent WoW), while the average value traded settled at USD 49 million (down by 13.7 percent WoW). Investors are now closely watching for the unfolding financial results and the Ijarah Sukuk auction, anticipating their impact on the upcoming week’s market dynamics.
