Pakistan Stock Exchange Benchmark Index Up 3.3%WoW – OpEd
The Year 2024 started optimistically for Pakistan Stock Exchange and its benchmark index surged 2,211 points on the first day. However, political noise cast a shadow, dragged the index 151 points below the week’s first day closing at 64,515 points, up 3.3%WoW to close the week on January 05, 2024.
Despite the headwinds, economic factors provided positive signals, foreign exchange reserves held by State Bank of Pakistan rose by US$1.3 billion in last two weeks of December 2023, marking a 23-week high, closing at US$8.22bn as of December 29, 2023 and would potentially exceed further with the anticipated US$700 million IMF second tranche in current month.
Additionally, 18-month high exports at US$2.8 billion narrowed the trade deficit by 40%YoY, resulting in the current account to remain in control. However, December 2023 CPI jump to 29.7%, spurred by fuel price adjustments, raising concerns about inflationary pressures.
Overall, market participation also witnessed a slight recovery, with daily traded volumes averaging at 687 million shares, up 5.4%WoW.
On the currency front, the Pakistani Rupee maintained its appreciation momentum by gaining 0.16%WoW against the US Dollar, closing at PKR281.4/US$ at the weekend.
Other major news flows during the week included: 1) Discos’ tariff hiked by PKR4.13/unit, 2) Pakistan’s dollar bonds gained 93% in 2023, 3) Cement exports jumped 155%, domestic sales fall 4% in December 2023, 4) Money supply rose to PKR35.18 trillion in November 2023 and 5) IMF set for first review on January 11, 2024.
On the sectorial front, Automobile Parts & Accessories, Sugar and Allied Industries, and Oil and Gas Exploration companies were amongst the best performers, whereas, Modarabas, Cable and Electrical Goods, and Miscellaneous were the top laggards.
Flow wise, major net selling was recorded by Individuals with a net sell of US$10.63 million. Other organizations absorbed most of the selling with a net buy of US$5.49 million.
Top performing scrips of the week were: PSMC, KEL, HCAR, SEARL, and OGDC; while laggards included: PSEL, ASL, PAKT, PSX, and LCI.
Looking ahead, the market is anticipated to maintain its bullish momentum, fueled by the disbursement of the IMF SBA’s second tranche.
The forthcoming elections will be closely watched, and uncertainty surrounding their outcome could potentially hinder the market’s bullish trend. However, a peaceful resolution could provide a significant boost to investor confidence.
Analysts recommend the investors to maintain long-term positions in companies with strong fundamentals, while tactfully managing any fundamentally weak entities through a timely profit-taking strategy.
Investors are also advised to focus on companies offering robust dividend yields, especially in the Banking, Energy, and Fertilizer sectors, presenting opportunities for accumulation.
