KSE 100 crosses 80,000 level

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This week marked the commencement of a new fiscal year, in which the market momentum remained bullish and for the first time closed above the 80,000 points level. On economic front, CPI for Jun’24 stood at 12.6%, taking the FY24 average inflation to 23.4%. Additionally, the SBP reserves witnessed 2-Yr high reaching to USD 9.4bn. Moreover, Pakistan’s trade deficit in FY24 decreased by 12.3% YoY to USD 24.1bn. Furthermore, Central government’s debt as of May’24 increased by 2.6% MoM to PKR 67.8trn. In addition, Pak Rupee depreciated by PKR 0.03 | 0.01% WoW, arriving at 278.38 against the greenback. The market closed at 80,213 points, increasing by 1,768 points or 2.3% WoW.

Sector-wise positive contributions came from i) Commercial banks (1,031pts), ii) Oil & Gas Exploration Companies (175pts), iii) Fertilizer (158pts), iv) Oil & Gas Marketing Companies (116pts), and v) Cement (78pts). Meanwhile, the sectors that mainly contributed negatively were i) Automobiles (39pts), ii) Chemical (26pts), iii) Miscellaneous (25pts), iv) Textile composite (15pts) and Tobacco (11pts). Scrip-wise positive contributors were HBL (280pts), NBP (158pts), POL (132pts), PPL (110pts), and BAHL (104pts). Meanwhile, scrip-wise negative contributions came from OGDC (50pts), ENGRO (42pts), THALL (39pts), IBFL (20pts), and PSEL (19pts).

Foreigner buying continued this week, clocking in at USD 7.7mn compared to a net buy of USD 2.5mn last week. Major buying was witnessed in All Other Sectors (USD 5.4mn) and Commercial Banks (USD 2.2mn). On the local front, selling was reported by Mutual Funds (USD 13.6mn) followed by Companies (USD 4.6mn). Average volumes arrived at 440mn shares (up 23.8% WoW), while the average value traded settled at USD 66mn (up 31.3% WoW).

Outlook and Recommendation

In the upcoming week, market participants will closely monitor the new IMF EFF program with IMF and any positive developments associated with it are anticipated to maintain the positive momentum. Additionally, stocks are currently trading at attractive valuations, potentially attracting a greater number of investors seeking promising opportunities in the market.

Our preferred stocks are OGDC, PPL, MCB, UBL, MEBL, LUCK, FCCL, DGKC, MLCF, FFC, PSO, HUBC, ILP, NML and, INDU. The KSE-100 is currently trading at a PER of 4.2x (2025) compared to its 5-year average of 5.9x, offering a dividend yield of ~10.0% compared to its 5-year average of ~8.3%.

Courtesy – AHL Research

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