PSX gains 3.76% MoM in March 

The Pakistan stock market’s benchmark KSE-100 index closed the month at 67,005 points, recording a gain of 2,427 points or 3.76% and setting a new record. 

According to a note by AKD Research, the month, under review, saw several key events, including the inauguration of a new government and the smooth progress of the IMF’s second review under its Stand-By Arrangement, culminating in a staff-level agreement. 

The State Bank of Pakistan (SBP) maintained the policy rate at 22% in its March meeting, a move that was anticipated by the market. Remittances rose by 18% year-over-year, and imports declined by 6% month-over-month, resulting in a current account surplus of $128 million for February, a significant improvement from the $303 million deficit the previous month. 

This shift contributed to reducing the current account deficit to just below $1 billion for the first eight months of the fiscal year. 

The GDP growth rate for the second quarter of FY24 was 1.0% year-over-year, supported by a 5% increase in agriculture but hindered by a 0.8% decrease in industrial activity. 

Brokerage firm said that inflation is projected to decrease, with March’s consumer price index expected at 20.6% year-over-year, down from 23.1% in February, marking the first instance of positive real interest rates in 38 months. 

The first initial public offering of the year was concluded by Secure Logistics Group Ltd. 

The State Bank’s foreign exchange reserves slightly increased by US$69 million to US$8 billion as of March 22. 

The Pakistani rupee remained stable against the US dollar, closing at 278.7.

Brokerage note further said that investor interest in the transport sector surged, partly due to discussions on the privatisation of state-owned enterprises and the government’s plans to restructure and sell the national airline, PIA, leading to a 94% increase in the sector. 

Refineries gained 7% following the announcement of an amended refinery policy. 

Conversely, textile weaving and leasing sectors experienced declines of 9% and 6%, respectively. Companies were net sellers, offloading $25.6 million in holdings, while the insurance sector was a net buyer with $33.4 million in purchases. 

Foreign investors also showed interest, especially in banks, contributing to a net purchase of US$15.3 million.

As per AKD’s note, the easing inflation trend suggests the possibility of a policy rate cut in the final quarter of the fiscal year. The upcoming earnings season will provide insight into corporate profitability. Despite high market levels, the forward price-to-earnings ratio remains at 3.5, indicating strong fundamentals. The market is expected to see growth in sectors that have previously lagged, such as cement and chemicals.