Karachi: The KSE100 index witnessed substantial gains this week, closing at 83,532 points, which marks a weekly increase of 2,240 points or 2.76%. This surge was predominantly fueled by sectors such as Fertilizers and Exploration and Production due to a reassessment driven by declining fixed-income yields.
According to AKD Securities Limited, the positive trend in the market is attributed to several factors, including the expectation of a cut in interest rates and the approval of the International Monetary Fund’s Extended Fund Facility (EFF). These elements combined to enhance investor confidence across various high-dividend-yielding sectors.
Significant financial shifts included a drop in the Consumer Price Index to 6.93% year-on-year in September 2024, the lowest since January 2021. The yields on 6-month and 12-month Treasury Bills also fell by 334 and 326 basis points, respectively, from previous auctions. Despite these positive indicators, Pakistan’s trade deficit stood at $1.78 billion in September.
In other market movements, oil marketing companies reported a 20% annual increase in offtakes, totaling 1.27 million tons in September. Conversely, cement offtakes fell by 5% year-over-year, reflecting weaker domestic demand amid an economic slowdown and rising construction costs.
The currency market saw the Pakistani Rupee remaining stable against the US dollar, closing the week at 277.52. In the backdrop of these economic activities, foreign investors were net sellers, offloading $26.1 million in stocks, while mutual funds were net buyers of the same amount.
Sector performance varied, with Textile Spinning, Leather and Tanneries, and Oil and Gas Exploration among the week’s top gainers. Conversely, sectors such as Modarbas and Vanaspati and Allied Industries faced declines.
The outlook remains optimistic with the market trading at an attractive price-to-earnings ratio of 3.6x and a dividend yield of 13.1%. This is expected to attract further investments, particularly in high-dividend-yielding stocks, which are likely to benefit from the ongoing monetary easing and structural reforms.