PSX continues bullish run, gains over 700 points

KARACHI: Pakistan Stock Exchange’s benchmark index gained more than 700 points in the intraday trading as the country begins talks with the International Monetary Fund for the new bailout package.

The benchmark KSE-100 index increased by 707.87 points, or 0.97 percent, from its previous closing of 73,085.50 to 73,793.37 at 12:12 p.m., according to the PSX website.

Amidst forecasts of inflation declining more quickly than anticipated, shares in the PSX surged 427 points last week to hit a new milestone of 73,000 points.

At the end of the day, the KSE-100 index was up 427.45 points, or 0.59 percent, from its closing of 72,658.05 on May 10 to 73,085.5 points.

Mohammed Sohail, CEO of Topline Securities, stated on social media that “based on our analyst’s estimates Pakistan’s current PE [price earning ratio] of 3.7x will linearly revert to its historical average of 6.93x over next 3 years of IMF program (Jul 2024 – Jul 2027), subject to the successful implementation of the program and its conditionalities concerning fiscal/monetary discipline and structural reforms.”

According to Finance Minister Muhammad Aurangzeb, Pakistan seeks a more comprehensive program to achieve economic stability.

Read More: Bulls roar as PSX soars to new all-time high crosses 73,000 points

The government has made it clear that structural changes would be made to the tax code, the energy industry, and state-owned businesses.

“Our team believes that PE by Jun 2025 will rise to 4.6x, taking our index target for Jun 2025 to 106k. In line with this, our Index target for Dec 2024 is now revised up to 87k (earlier: 75k), providing a further return of 20%,” Sohail said.

The analyst at the PSX added that high leverage, pharma, consumer, and circular debt-affected companies/sectors would garner investors’ attention in the next 12 months due to expected monetary easing, deregulation of non-essential pharmaceutical prices, lower inflation, and gradual address of recurring circular debt.