KARACHI: Pakistan stocks may have positive sentiments during next week due to expected resumption of talks between the authorities and the international Monetary Fund (IMF).
Analysts at Arif Habib Limited said that with the IMF mission visiting Pakistan for the 9th Review of the program, the investors’ sentiment is expected to remain strong.
READ MORE: Stocks shed 396 points as investors opt profit taking
If the review is successful, Pakistan will receive $1.1 billion and be able to get aid from friendly countries.
Albeit, concerns over inflationary pressure emanating from these measures could potentially pick up in the immediate to medium term stemming from high domestic fuel prices, augmented electricity and gas tariff as well as hit on corporate profitability in the wake of high input costs.
READ MORE: Pakistan stocks gain 1,061 points to celebrate free float exchange rate
The benchmarKSE-100 of Pakistan Stock Exchange (PSX) is currently trading at a PER of 3.9x (2023) compared to Asia Pac regional average of 12.2x while offering a dividend yield of 10.5 per cent versus 2.8 per cent offered by the region.
The market remained flattish on the opening bell owing to concerns over a potential massive hike in policy rate by SBP. However, the index witnessed a strong momentum after SBP announced only a 100 bps increase in policy rate.
READ MORE: Pakistan stocks extend gains on optimistic economic outlook
Moreover, the government made a bold call to resume IMF program and its ninth review, and announced that it will undertake tough measures to fulfil prerequisites before the resumption of talks (such as hike in gas and electricity tariff, and imposition of additional tax and flood levy).
During the week, the government implemented market determined exchange rate (which is one of IMF’s pre-requisites), which resulted in the Pak Rupee recording a historic low level of PKR 262.60 against $(depreciating by PKR 35.93 |15.64 per cent WoW).
READ MORE: Pakistan stocks jump 612 points to welcome interest rate hike
In response, the IMF has agreed to send a mission to Pakistan in the coming week. The investors hailed these developments and the robust sentiment took the market above 40,000 points level.
Meanwhile, SBP foreign exchange reserves plummeted by $923 million, settling at $3.7 billion (lowest since February 2014). Albeit, the market closed at 40,451points, gaining 2,043points | 5.3 per cent WoW (highest weekly return since 15th April 2022).
Sector-wise positive contributions came from i) Banks (653 points), ii) Fertilizer (328 points), iii) E&P (308 points), and iv) Cement (197 points). Whereas, the sectors which contributed negatively were i) Pharma (24 points) and Auto Parts (10 points).
Scrip-wise positive contributors were HBL (283 points), ENGRO (198 points), PSEL (150 points), TRG (139 points) and OGDC (126 points). Meanwhile, scrip-wise negative contribution came from SYS (78 points), INDU (14 points) and HINOON (14 points).
Foreigners buying continued this week, clocking in at $2.8 million compared to a net buy of $4.9 million last week. Major buying was witnessed in Banks ($3.0 million) and Power ($0.6 million).
On the local front, selling was reported by Insurance ($8.8 million) followed by Companies ($3.9 million). Average volumes arrived at 217 million shares (up 52 per cent WoW) while average value traded settled at $33.9 million (up 56 per cent WoW).. Average volumes arrived at 217 million shares (up 52 per cent WoW) while average value traded settled at $33.9 million (up 56 per cent WoW).
