Political Stability Boosts Stock Market, Index Rises 3,751 Points

Karachi: The approval of the 27th Amendment in Pakistan’s legislative houses has brought a wave of optimism to the country’s stock market, resulting in a significant 3,751-point increase in the index over the last two trading sessions. The benchmark index closed at 161,935 points on Friday, marking a 1.5% rise, or 2,342 points, over the week.

This surge in the stock market came despite initial bearish trends earlier in the week. These trends were attributed to unresolved tensions between Pakistan and Afghanistan, with peace talks ending without resolution and Afghanistan halting trade with Pakistan.

Market participation, however, saw a decline, with the average daily traded volume dropping 13.6% from the previous week to 944 million shares. This decrease was down from 1.1 billion shares in the prior week.

On the economic front, October saw a 12% year-on-year increase in workers’ remittances, totaling $3.4 billion. Inflows under the Roshan Digital Account rose by 4.6% month-on-month to $250 million. Additionally, the auto sector experienced a 38% year-on-year growth in sales, with 20,985 units sold.

The State Bank of Pakistan’s foreign exchange reserves increased by $22 million week-on-week, reaching $14.5 billion as of November 7. The Pakistani rupee appreciated slightly against the US dollar, closing the week at 280.7 PKR/USD, a 0.04% week-on-week increase.

Looking ahead, analysts expect the positive momentum in the KSE-100 index to continue, bolstered by an anticipated successful staff-level agreement during the IMF’s second review. Improved relations with the US and Saudi Arabia could also drive foreign investment flows, further enhancing investor sentiment.

Local equities remain attractive, trading at a multiple of 7.6x with a dividend yield of 6.8%. Top investment picks include companies such as MEBL, MCB, HBL, OGDC, and PPL, among others.