Pakistan stocks to remain bullish due to lowering interest rates

After posting 2.34% gains during the week ended October 11, Pakistan stocks are expected to remain positive going forward, supported by declining interest rates, which are likely to continue driving flows towards equities.

In addition, the visit from the Saudi delegation further sparked optimism around potential investment deals.

“Despite recent highs, market remains attractively valued,” an analyst at AKD Securities noted.

With the result season commencing from next week, certain scrips are expected to be in light, driven by the expectation of strong financial results.

Sectors benefiting from monetary easing and structural reforms, especially high-dividend-yielding stocks, will attract investor interest. These stocks are expected to rerate as their yields align with fixed-income returns.

Pakistan stock market displayed remarkable performance this week by reaching an all-time high of 85,669 points on closing basis on Wednesday.

The KSE-100 index gained 2.34% or 1,951 points during the week to close at 85,483 points.

An analyst at Arif Habib Limited noted the scrips such as Oil & Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) remained in prime focus throughout the week.

“Their latest published detailed accounts reported almost 100% cash sales in fiscal year 2023-24's fourth quarter, with accumulation of circular debt halted”.

Foreigners sold equities worth $22.6 million this week, down 13.4% from $26.1 million last week.

Indian stocks

Indian stocks fell this week due to foreign investors pulling out money, slower corporate earnings, and rising tensions in the Middle East.

Foreign investors sold Indian shares for nine days straight, totaling $7.8 billion, and moved their investments to China after it announced major stimulus measures.

Analysts suggest that in the past two weeks, investors have been taking profits because of these foreign outflows, concerns about earnings slowing down, unrest in the Middle East, and high stock valuations.

BSE-100 index shed 0.07% during the week to close at 26,491 points.

Meanwhile, DFM General Index gained 1.04% during the week to close at 4,440.68 points.

Currency

Pakistani rupee ended marginally weaker against the US dollar during the week, depreciating by 0.04% in the inter-bank market. The currency closed at PKR 277.63 to a dollar, shedding 11 paisas from the last week’s close of PKR 277.52 against the greenback.

The US dollar rose for the second week in a row. This happened because last week’s strong job numbers made traders think the Federal Reserve won’t cut interest rates by half a percentage point at their next meeting.