Pakistan stocks to stay positive amid improving indicators

Pakistan stocks are expected to stay positive going forward on the back of lower interest rates, a stable PKR, and improving macroeconomic indicators.

An analyst at KTrade noted in a report that the overall market outlook remains positive, “driven by projections of sustainable economic growth in a declining interest rate environment”.

Analysts believe continuation of monetary easing due to disinflationary environment and improving macroeconomic environment would make investment in equities more appealing.

Moreover, declining external financing requirement under the IMF program, would keep foreigners’ interest alive.

“We recommend sectors that benefit from monetary easing and structural reforms. However, modest economic recovery may limit the upside for cyclicals,” an analyst at AKD Securities noted.

The KSE-100 index remained bullish during the week ended November 16, closing at 94,763, up by 1.6%.

An International Monetary Fund (IMF) delegation recently visited Pakistan to review its economic performance for the first quarter of fiscal year 2024-25 (FY25). The market received a boost after the Federal Board of Revenue (FBR) assured the IMF that the revenue target of Rs12.9 trillion for FY25 would be met.

Positive sentiment was further strengthened by reports that there would be no mini-budget, new taxes, or sales tax on petroleum products.

Banking sector stocks saw gains after the Islamabad High Court (IHC) decided to temporarily relieve banks from additional tax for not meeting ADR targets. According to the latest data, SBP reserves stand at $11.3 billion.

Indian Stocks

After hitting many record highs this year, Indian stocks are now facing consistent selling pressure and have entered a correction phase. Bears are dominating the market due to several domestic and global factors, leading to a likely muted sentiment in the coming sessions.

Analysts point to weak 2QFY25 results and the continuous outflow of foreign funds as key reasons for the negative sentiment.

Additionally, a rise in domestic CPI inflation to a 14-month high of 6.2%, a strong dollar index, and increasing US 10-year yields suggest that market volatility will continue in the short term.