Karachi Stock Exchange (KSE 100)-listed stocks can be a good trading bet, according to Christopher Wood, global head of equity strategy at Jefferies, especially around the International Monetary Fund (IMF) bailout periods.
Since the last IMF program in September 2024, the MSCI Pakistan Index is up 84 per cent in US dollar terms, Wood wrote in his weekly note to investors, GREED & fear, a period in which it has outperformed MSCI India by 124 per cent in US dollar terms.
Pakistan’s stock markets, too, have been taking note of the developments with the Karachi Stock Exchange (KSE 100) rising nearly 13 per cent thus far in fiscal 2026-27 (FY27) as compared with nearly 6.4 per cent up move in the BSE Sensex during this period, data shows. In the last one year, KSE 100 index has surged close to 44 per cent and outrun the BSE Sensex that moved up 8 per cent during this period.
The two-week ceasefire is good news for an energy vulnerable India, Wood believes, even though it must be galling, from a New Delhi perspective, to see Pakistan achieve such a prominent profile on the world stage.
Valuation & risks
That said, Wood remains ‘marginally overweight’ on Indian stocks, and believes that any renewed conflict in Iran along with a sudden cessation in domestic mutual fund inflows remain key risks for the Indian stock markets in the months ahead.
The Nifty one-year forward price-earnings (PE) is now 18.3x after reaching 17x at the end of March, which is close to the pre-Covid average of 16.8x seen between 2015 and 2020.
“It is further the case that the de-rating in recent months, driven by aggressive foreign selling rather than any particularly negative news flow, means that India’s traditional overvaluation has reduced significantly,” Wood said in his weekly note.
