PSX rallies on policy rate cut optimism

Pakistan Stock Exchange (PSX) continued its upward momentum on Wednesday, climbing nearly 500 points, driven by investor optimism about potential rate cut in the upcoming State Bank of Pakistan's (SBP) monetary policy announcement.

The KSE-100 index started the day at the intra-day low of 78,488.88 points but it steadily moved upwards owing to positive sentiment, bolstered by the Consumer Price Index (CPI)-based inflation reading of 9.6% for August. Investor confidence got further strength from the prime minister's assurance regarding compliance with the International Monetary Fund (IMF) terms to secure the $7 billion Extended Fund Facility (EFF). The finance minister's affirmation of progress on securing external financing added to the market's positive mood.

Additionally, plans for the strategic sale of blue-chip state-owned enterprises (SOEs) and a notable 14% surge in exports for July-August 2024 contributed to the rally. The market touched the intra-day high at 78,890.79 points and closed near the day's peak with substantial gains.

"Stocks closed bullish amid speculation about rate cut in the SBP policy announcement on September 12 after CPI inflation came in at 9.6% for August," said Ahsan Mehanti, MD of Arif Habib Corp.

"PM's assurance of working on IMF terms to secure the $7 billion EFF, finance minister's affirmation of financing assurances at advanced stages, plans for the sale of blue-chip SOEs and 14% surge in exports for July and August played the role of catalysts in bullish close at the PSX."

At the end of trading, the benchmark KSE-100 index registered a notable rise of 491.69 points, or 0.63%, and settled at 78,848.01.

Topline Securities, in its commentary, noted that the KSE-100 index rose 492 points. "This positive momentum followed the finance minister's remarks that the approval of IMF's $7 billion EFF is on track, with Pakistan nearing assurances of external financing," it said.

Key stocks including Mari Petroleum, Oil and Gas Development Company, Engro Fertilisers, Lucky Cement and Bank AL Habib drove the market's rise, contributing 290 points to the index, Topline added.

Arif Habib Limited (AHL), in its report, observed that the 79,000-point level "is now within touching distance following a mid-week broad-based rally."

Some 67 shares rose while 28 fell with Mari Petroleum (+3.8%), Oil and Gas Development Company (+2.54%) and Engro Fertilisers (+1.77%) providing the biggest contribution, it said.

JS Global analyst Mubashir Anis Naviwala commented that bullish activity was observed in the market, primarily driven by sideboard stocks. "Moving forward, we expect the market to experience range-bound activity, where any dips could be considered a buying opportunity, with focus on oil and gas, fertiliser, cement and technology sectors," the analyst added.

Overall trading volumes increased to 969.8 million shares compared with Tuesday's tally of 436.7 million. The value of shares traded during the day was Rs17.5 billion. Shares of 443 companies were traded. Of these, 259 stocks closed higher, 138 dropped and 46 remained unchanged.

WorldCall Telecom was the volume leader with trading in 234.6 million shares, gaining Rs0.16 to close at Rs1.37. It was followed by Pervez Ahmed Co with 48.7 million shares, gaining Rs0.36 to close at Rs1.44 and Kohinoor Spinning Mills with 45.1 million shares, gaining Rs0.28 to close at Rs11.41.

Foreign investors were net sellers of shares worth Rs880.9 million, according to the NCCPL.