Expectation of positive conclusion of talks between Pakistan and the International Monetary Fund (IMF) for the resumption of the Extended Fund Facility (EFF) and ongoing result season are basic drivers that can keep the Pakistan Stock Exchange (PSX) in green territory in the week starting today (Monday). However, ongoing protests of a religio-political party as well as opposition parties, consistent depreciation of the rupee against the US dollar, continuous surge in inflationary figures, and uncertainty on the geopolitical and regional fronts, especially the situation in Afghanistan, may keep the bourse under pressure. Prices remained on the higher side as weekly inflation surged by 1.38 percent for the third straight week ended on October 21, 2021, while it went 14.48 percent up on a year-on-year basis. Earlier during the previous weeks ended on October 14 and October 07, the weekly inflation went up by 0.20 percent and 1.21 percent, respectively. This may dent the investors’ confidence, which is already at a very low level. Stocks closed the second consecutive week in the green zone on the expectation of resumption of the IMF programme and reduction in current account deficit by 24 percent on a month-on-month basis in September. The benchmark KSE-100 Index gained 756.83 points (+1.69 percent) on a week-on-week basis to close at 45,578.36 points. The KSE-30 Index gained 350.33 points (+1.99 percent) to close at 17,871.80 points. The overall market capitalisation increased by Rs68.60 billion to Rs7.86 trillion on a weekly basis. Corporate profitability is another factor to dictate the market performance amid the results season, as there are strong expectations that earnings will grow from eight percent to 10 percent for the first quarter of the current fiscal year. So far, most of the companies have shown unprecedented financial results in their history. Moreover, decline in infection ratio of the novel coronavirus in the country and achievement of the 100 million vaccination benchmark may give some support to the equity market. Another factor that can provide support to the cement sector is the decrease in coal prices, which reportedly declined from $230 per tonne to $180 per tonne. This will also impact steel stocks positively. Again, expected increase in interest rate by the State Bank of Pakistan in the next monetary policy meeting has been supporting the banking sector. On the other hand, shares’ prices have suffered more as compared to the drop in the index level, and shares of some major companies are available at very attractive prices. Analysts believe the market participants should look to invest in the companies with strong fundamentals instead of going for “betting” stocks as shares are available in the market at very lucrative prices. The KSE-100 Index is currently trading at a PER of 5.2x (2021) compared to Asia Pacific regional average of 14.7x while offering a dividend yield of 8.1 percent versus 2.2 percent offered by the region. During the last week, positive contributions came from commercial banks (463 points), cement (184 points), oil & gas exploration companies (137 points), fertilizers (113 points), and insurance (43 points). Whereas the sectors that contributed negatively included technology & communication (-155 points), food & personal care products (-31 points) and engineering (-27 points).