Pakistan stocks to stay positive backed by ongoing monetary easing, lower inflation

Pakistan's stock market is expected to stay positive, backed by ongoing monetary easing in a disinflationary environment and improving macroeconomic indicators.

Analysts highlight that investors will likely focus on the upcoming inflation figures and the monetary policy decision next month.

Furthermore, with declining fixed-income yields and stronger macroeconomic fundamentals, equities are seen as an attractive asset class. The market is currently trading at a price-to-earnings (PE) ratio of 4.5x and a dividend yield (DY) of 10.4%.

Market remained positive throughout the week ended November 22, 2024, with KSE-100 index closing at a record high of 97,798 points up 3.2% or 3,035 points.

Awais Ashraf, director research at AKD Securities, said, “Subsiding political risk, combined with robust institutional interest driven by easing interest rates, has supported the index’s continued strong performance.”

Indian Stocks

Indian shares experienced their best session since early June on Friday, breaking a two-week losing streak. This rally was driven by easing concerns over credit risks associated with exposure to Adani Group stocks, which bolstered heavyweight financials.

Recently, Indian shares had entered correction territory due to disappointing corporate earnings and ongoing foreign selling. The blue-chip stocks hit their lowest point since early June on Thursday after U.S. authorities indicted Chairman Gautam Adani and seven others on alleged bribery charges.

Following corrections in the benchmarks and broader small- and mid-cap stocks, investors found quality stocks at reasonable valuations, attracting fresh investments. Market experts noted on Saturday that with most state elections now concluded, the market could stabilize as government spending increases to meet the FY25 capital expenditure targets.

The rally in financial stocks and strong U.S. labor market data also contributed to the market's rise. Over the week, the Indian benchmark index gained 2.39%, reflecting renewed investor confidence.