Karachi: The Pakistan stock market reached unprecedented levels this week as investor optimism surged, following favorable economic developments. The benchmark index climbed by 2,779 points, a 1.7% increase from the previous week, closing at an all-time high of 169,865 points. This upward trend was fueled by the announcement of the IMF Executive Board's approval of the third tranche of $1 billion under the Extended Fund Facility and $200 million under the Resilience and Sustainability Facility for Pakistan.
Investor sentiment was further buoyed by the Economic Coordination Committee's decision to adjust oil marketing companies and dealer margins on motor spirit and high-speed diesel, based on national consumer price indices, with caps set between 5-10%. Additionally, the government announced an incremental electricity package aimed at supporting industries and agriculture.
Market participation saw a significant boost, with average daily traded volume increasing by 49.5% week-on-week, reaching 1.3 billion shares compared to 863 million shares the previous week. On the macroeconomic front, worker remittances for November were recorded at $3.2 billion, marking a 9% year-on-year increase. The auto sector also experienced a surge, with sales rising by 41% year-on-year to 19,635 units in November.
The State Bank of Pakistan's foreign exchange reserves increased by $12 million week-on-week, ending the period at $14.6 billion as of December 5. On the currency front, the Pakistani rupee appreciated slightly by 0.04% against the US dollar, closing the week at 280.32 rupees per dollar.
Looking ahead, analysts from AKD Securities Limited anticipate continued momentum in the Karachi Stock Exchange-100 index. This optimistic outlook is attributed to the successful disbursement of funds under the EFF and RSF programs, minimal impact from recent floods, and improved credit ratings by global agencies amid declining fixed income yields. Investor sentiment is expected to further improve with potential foreign portfolio and direct investment flows, driven by enhanced relations with the United States and Saudi Arabia.
The lack of alternative investment options and the attractive valuation of local equities, trading at a multiple of 7.8 times with a dividend yield of 6.6%, are also contributing factors. Top stock picks identified by AKD Securities include MEBL, MCB, HBL, OGDC, PPL, PSO, ENGROH, LUCK, DGKC, FCCL, ILP, and INDU.