TFD Stocks Overview

Market gains 8,142 points in 4 weeks to cross 59,000 mark

KARACHI: Pakistan Stock Exchange (PSX) closed the fourth consecutive week on a high note on the back of improved economic outlook and positive indicators, with the benchmark index standing at 59,086.35.
The benchmark KSE-100 Index gained 1,689.33 points (+2.94 percent) on a week-on-week (WoW) basis to close at 59,086.35 points from 57,397.02 points. Overall, the benchmark index has gained 8,142 points during the last four weeks. Similarly, the KSE All Share Index closed at 39,559.21 points against 38,318.54 points last week, gaining 1,240.67 points (+3.24 percent) on a week-on-week basis.
The market gurus have enlisted different factors for this achievement. They said the market sentiment was boosted by the International Monetary Fund’s (IMF) preliminary approval for the release of the next loan tranche of around $700 million under the current $3 billion programme. This will bring the total disbursements under the programme to almost $1.9 billion. The loan will help Pakistan improve its balance of payments and fiscal position.
The Pakistani rupee (PKR) also appreciated by 1.13 rupees against the US dollar this week and closed at PKR 285.37, marking the second consecutive weekly gain. The current account deficit also narrowed to $74 million in October, a 91 percent decline from the same month last year, indicating a lower demand for dollars in the market.
Exports showed a 12% month-on-month (MoM) increase while imports were up 9% MoM. The foreign direct investment (FDI) rose by 7% to $525 million during the first four months of the fiscal year, adding to the foreign exchange reserves. The IT export remittances increased by 4.4 percent to $893 million in July-October, while the total borrowing fell by $0.41 million to $3.85 billion. A key event was the easing of weekly inflation, measured by the Sensitive Price Indicator (SPI), by 0.06 percent, which boosted investors’ confidence.
The investors also rejoiced over improved corporate profitability. Earnings of listed companies rose 46 percent year-on-year in the first nine months of 2023 while the increase was a whopping 66 percent in the July-September quarter alone. Similarly, higher dividends – up 42pc year-on-year in Jan-Sept 2023 – coupled with a share buyback spree in which listed companies have purchased their own shares worth Rs41 billion since May 2022 also helped sustain the positive momentum.
Among worrying factors for investors was the rupee’s continuous topsy-turvy movement, shrinking foreign exchange reserves and gas tariff hike.
Sector-wise positive contributors were commercial banks (960 points), fertilizer (247 points), technology and communication (182 points), glass and ceramics (89 points) and miscellaneous (89 points). In terms of individual stocks, positive contributions came from Meezan Bank (221 points), Bank AL Habib (145 points), Systems Limited (135 points), Fauji Fertilizer Company (114 points) and Mari Petroleum (99 points). Foreigners’ buying continued during the week under review, which came in at $8.5 million compared to net buying of $6.3 million last week.
According to analysts, the market has maintained the momentum and it is projected that the benchmark will hit 75,000 points over the next 13 months in December 2024. The forecast is based on three major developments in the near future, including a potential cut in interest rate by seven percentage points to 15pc by the end of December 2024 from a record high of 22pc at present; general elections are expected to be held on time in February 2024; and the newly elected government would acquire a new and larger IMF loan programme to push the economy into a growth phase from the current stabilization phase. – TLTP