Outlook for Pakistan stock market remains positive

The Pakistan Stock Exchange (PSX) made new waves in the outgoing week, closing at a record high of 154,277 points. Separately, the Pakistani rupee also appreciated against the U.S. dollar for the third straight week.

The benchmark KSE-100 index went up by 5,659 points or 3.8%.

Moreover, the PKR appreciated marginally by 0.04% during the week, closing at 281.65 against the USD.

The market closed in the green in all five sessions as the cement sector surged, with the share prices of almost all listed companies reaching new highs. This was because of expectations that there would be a strong demand for cement amid reconstruction efforts following the devastating floods in the Punjab province.

Hubc was the winner among individual stocks (+13.3%) as the company reported better than expected final dividend (PKR 10) for the year ended June. Other top contributors were LUCK (9%), ENGROH (7.8%), NBP (15.6%), DGKC (14.4%), and FFC (2.5%).

Negative impact of floods

On the economic front, there is likely to be negative impact on economic growth due to recent floods as crops’ output has been impacted.

These floods will also have short-term inflationary impact on perishable food items.

At the same time, there has also been an uptick in prices of non-perishable food items.

While CPI for the month of August came in at 3%, which was lower than anticipated, it is expected to be higher in September and October due to the floods.

An analyst from Arif Habib Ltd., said that with the ongoing results season, certain scrips are expected to remain in focus, while the flooding situation is also being monitored for its potential impact on market sentiment.

The KSE-100 index is currently trading at a forward PER of 7.8x (2026) against its 15-year average of 8.59x, offering a compelling dividend yield of 6.0% versus the historical average of 6.13%.

Average daily turnover has improved 19% to 1,068 million shares.

Foreign investors remained net sellers during the week, with an outflow of $9.5 million, which was largely offset by local buying, primarily from Individuals and mutual funds.

Positive outlook

An analyst from Spectrum Securities said that stock market outlook remains positive based on pure valuation despite concerns over GDP growth outlook due to floods and the resultant heavy cost of rehabilitation of population, reconstruction of roads, bridges, embankments of waterways, and canals.

The prospects of these expected new spendings have resulted in extraordinary sudden surge in cement companies’ prices that we are witnessing now in the stock market, he added.

For the majority of other sectors, demand drivers remain on the weaker side, according to the analyst.

The next upside target levels are placed near 156,000 and 160,000 points.

On the downside, trailing moving averages of 10DMA is near 150,000 and 30DMA at 146,400 points, the analyst said.