Daily Times

Pakistan Stock Exchange (PSX) snapped a three-week winning streak last week, with the benchmark KSE-100 Index losing 1,355.41 points (-2.1 percent) to close at 63,282.22 points.

Despite positive developments on the external front, 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 $706 million following the successful completion of the first review by the International Monetary Fund (IMF). The SBP reserves are anticipated to reach $8.9 billion next week.

Moreover, the United Arab Emirates (UAE) rolled over $2 billion loans for another year, which were maturing in January 2024. 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 $397 million in December 2023. Net Foreign Direct Investment (FDI) witnessed a robust growth of 35 percent YoY, settling at $863 million in 1HFY24. Meanwhile, the Pakistani Rupee recorded a marginal gain of 0.16% WoW.

The market turnover saw a fall during the week, with an average traded volume of 220 million shares worth Rs10.14 billion, marking a decrease of 34.22 percent MoM in the number of shares and 6.92 percent MoM in traded value. Moreover, the overall PSX average traded volume (All-Share Index) was recorded at 389 million shares worth Rs13.76 billion, marking a decrease of 30.52 percent MoM in the number of shares and a decrease of 14 percent MoM in traded value.

The major sectors taking the index towards south were cement which took away 230 points from the index. Other sectors included oil & gas exploration companies (-222 points), power generation & distribution (-148 points), automobile assembler (-82 points), and oil & gas marketing companies (-78 points).

The major sectors taking the index towards north during the week were fertilizer, property, sugar & allied industries, and modarabas, which cumulatively added 43 points.

Major companies depriving the index of points remained PPL (-234 points), LUCK (-103 points), HUBC (-100 points), MTL (-91 points), and HBL (-68 points). On the other hand, major companies adding points to the index remained ENGRO (+104 points), MEBL (+54 points), MARI (+45 points), UBL (+39 points), and POL (+31 points).

Foreign investors were net sellers during the week as they dumped $1.19 million worth of stocks, with overseas Pakistanis doing the bulk of the selling at $0.73 million. On the local front, insurance companies picked up $11.48 million worth of stocks, the highest among its peers. Alternatively, significant net selling was observed among mutual funds, amounting to $5.22 million, as they withdrew securities from sectors all across the board.

Analysts from Arif Habib Limited anticipate a positive trajectory for the benchmark KSE-100 index in the coming week, 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.