Pakistan Stock Exchange (PSX) on Thursday extended its bullish momentum as it surged over 500 points, driven mainly by a treasury bill auction where yields fell up to 148 basis points.
The notable drop in returns on treasury papers sparked optimism among investors, who particularly bought shares of cement and steel companies, ahead of a potential reduction in the State Bank of Pakistan's (SBP) policy rate.
Earlier, trading commenced on a positive note following Finance Minister Muhammad Aurangzeb's assurance about continuous engagement with the International Monetary Fund (IMF) for the approval of a $7 billion Extended Fund Facility (EFF).
Consequently, the KSE-100 index surged to its intra-day high at 78,996.22 points before midday. Though some profit-taking was witnessed later in the day, yet the market closed with significant gains.
"Stocks closed bullish after the government treasury bond yields were slashed up to 148 basis points, which is expected to lead to a reduction in the SBP's policy rate next month," said Ahsan Mehanti, MD of Arif Habib Corp.
"Banking and fertiliser stocks outperformed on reports of rising fertiliser prices and increasing banking deposits," he said.
"The finance minister's assurance of full engagement with the IMF and progress towards approval of a $7 billion EFF next month were also the catalysts for bullish close at the PSX."
At the end of trading, the benchmark KSE-100 index recorded healthy gains of 532.56 points, or 0.68%, and settled at 78,793.41.
Topline Securities, in its report, noted that the KSE-100 maintained its upward trajectory, registering intra-day rise of 735 points before closing at 78,793, up 0.68%.
"This sustained positive momentum is largely attributed to Wednesday's treasury bill auction, where the government significantly lowered the cutoff yields up to 148 basis points," it said.
Cement and steel sectors showed marked optimism as investors anticipated a rate cut in the upcoming monetary policy. Key stocks like DG Khan Cement (+5.59%), Fauji Cement (+4.48%), Kohat Cement (+4.10%), Crescent Steel and Allied Products (+10%), Aisha Steel Mills (+4.63%) and Mughal Iron and Steel Industries (+3.10%) closed higher, Topline added.
Arif Habib Limited (AHL), in its commentary, wrote that the KSE-100 showed a positive trend, reaching 79,000 points, largely driven by heavyweight sectors such as cement and refineries.
The index saw increase in 57 shares with notable contribution coming from Fauji Fertiliser (+3.88%), Service Industries (+9.04%) and Hub Power (+1.02%). Conversely, 43 shares fell, led by Engro Corporation (-1.04%), Habib Bank (-1.61%) and Meezan Bank (-0.77%), AHL added.
JS Global analyst Mohammed Waqar Iqbal said that positive momentum persisted at the PSX, fueled by optimism about a potential rate cut in the upcoming monetary policy announcement scheduled for September 12.
As a result, buying interest was primarily focused on cement and steel stocks, with notable activity also seen in fertiliser and oil and gas sectors, he said.
Overall trading volumes increased to 804.3 million shares compared with Wednesday's tally of 552.6 million. The value of shares traded during the day was Rs16.97 billion.
Shares of 473 companies were traded. Of these, 261 stocks closed higher, 138 fell and 74 remained unchanged.
WorldCall Telecom was the volume leader with trading in 140.9 million shares, gaining Rs0.11 to close at Rs1.31. It was followed by Kohinoor Spinning Mills with 91.4 million shares, gaining Rs0.76 to close at Rs11.99 and Power Cement with 51.6 million shares, gaining Rs0.24 to close at Rs6.03. Foreign investors were net sellers of shares worth Rs80.98 million, according to the NCCPL.
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