Daily Times

KARACHI: Pakistan Stock Exchange (PSX) bounced back amid clarity on the political horizon after closing the preceding three weeks in the red, with the benchmark KSE-100 Index gaining 2,942.86 points (+4.92 percent) to close the week at 62,815.82 points.

The main factors behind this turnaround of the market included agreement between Pakistan Muslim League-Nawaz and Pakistan Peoples Party to form the government at the federal level, and the statement of the International Monetary Fund (IMF) where it said it looks forward to working with the new government of Pakistan.

Another significant factor contributing to the favorable market conditions is the attractive valuations at which various stocks are currently trading. This allure is expected to attract investors, further propelling the market momentum in an upward direction. Moreover, robust earnings of most of the companies and strong fundamentals are also lending support to the market.

The market demonstrated a buoyant momentum during the week despite mixed indicators on the economic front. The current account shifted to a deficit of $269 million in January 2024 from a surplus of $404 million in December 2023. However, remittances reported a commendable growth of 26 percent year-on-year in January 2024.

The recent Treasury bills auction revealed an increase in cut-off yields by 126 basis points, affecting both 3-month and 12-month tenors. On the other hand, National Saving Schemes interest rates experienced a decrease across various certificates, ranging from 40 to 160 basis points.

Power generation climbed by 7.6 percent month-on-month in January 2024, indicating positive trends in the energy sector. The Roshan Digital Account recorded an inflow of $142 million in January 2024, reaching a total of $7.3 billion. However, foreign reserves held by the State Bank of Pakistan (SBP) declined by $44 million on a weekly basis, settling at $8 billion on February 16.

During the week under review, sector-wise contributions to the positive momentum were led by oil and gas exploration companies (623 points), followed by commercial banks (513 points), technology and communication (355 points), fertilizer (255 points), and power generation and distribution (254 points). On the other hand, miscellaneous (26 points) and chemical (16 points) were the major sectors making negative contributions.

Major companies adding points to the index remained OGDC (340 points), PPL (221 points), HUBC (216 points), SYS (201 points), and MEBL (195 points). Major companies depriving the index of points remained PSEL (57 points), NESTLE (20 points), COLG (15 points), FATIMA (11 points), and AKBL (10 points).

Foreign buying decreased during the week to $2.9 million from $5.2 million observed in the previous week. On the local front, selling activities were reported by individuals ($6.2 million), followed by insurance companies ($1.6 million). Average traded volumes witnessed a slight decrease of 3.3 percent during the week, while average value traded settled 6.3 percent lower WoW at $45 million.

As the anticipation builds for the formation of a new government in Pakistan next week, financial analysts predict a positive impact on the stock market. According to experts at Arif Habib Limited, the upcoming government formation is likely to reinforce the current positive sentiments prevailing in the market.

The analysts forecast that the new government, expected to be established in the coming week, will contribute to an already optimistic market atmosphere. Additionally, the ongoing results season is anticipated to keep certain stocks in the spotlight, driven by expectations of robust financial performances.