PSX surges nearly 1,000 points on optimism

Current account surplus, rising FDI, and global market trends fuel investor confidence

KARACHI:

The Pakistan Stock Exchange (PSX) experienced a significant rally on Thursday, driven by favourable macroeconomic indicators and a cut in the US Federal Reserve's interest rates. Investors were encouraged by improvements in Pakistan's economic environment, including rising consumer confidence, increased industrial output, and strong export performance.

The KSE-100 index, PSX's benchmark, surged by nearly 1,500 points during the day as Pakistan posted a current account surplus of $75 million for August 2024. This positive momentum was further supported by an increase in net foreign direct investment, which reached $214 million in August, up from $136 million in July.

In early trading, the index soared to an intra-day high of 82,003.58 points, reflecting robust buying interest across various sectors. However, profit-taking in the latter half of the day led to an intra-day low of 80,680.24 points. Despite the mid-day volatility, the index closed at 81,459.29, marking an impressive gain of 997.95 points, or 1.24%.

Key sectors like fertilisers, banking, and oil and gas development attracted significant investor interest. Fauji Fertiliser, Engro Fertiliser, Meezan Bank, MCB Bank, and Oil and Gas Development Company collectively added 690 points to the index's performance.

"Stocks closed bullish amid a rally in global equities and robust data on the $75 million current account surplus for August 2024," said Ahsan Mehanti, Managing Director of Arif Habib Corp. He added that rising global crude oil prices, coupled with expectations of the International Monetary Fund's (IMF) approval of a $7 billion Extended Fund Facility (EFF), also fuelled the bullish sentiment at the PSX.

Topline Securities noted in its report that the KSE-100 index was approaching the 82,000-point level for the first time in history, thanks to encouraging economic data and speculation about future interest rate cuts. The government's recent decision to reject all bids for Market Treasury Bills further fuelled expectations of lower interest rates.

Arif Habib Limited (AHL) also highlighted that the KSE-100 index reached an all-time high in rupee terms, breaking past 82,000 points during intra-day trading. This surge was attributed to the larger-than-expected rate cut by the US Federal Reserve, which sparked a global rally in risk assets.

In total, 61 stocks rose while 36 declined. Fauji Fertiliser (+5.17%), Engro Fertiliser (+5.4%), and Meezan Bank (+3.61%) were among the top gainers, contributing significantly to the index's rise. On the other hand, Mari Petroleum (-1.92%), TRG Pakistan (-7.68%), and Service Industries Limited (-2.11%) were the biggest decliners of the day.

As the PSX heads into the last trading session of the week, coinciding with the FTSE rebalance, the market is up 2.6% week-on-week. JS Global analyst Mubashir Anis Naviwala noted that the KSE-100 index had reached an all-time intra-day high before closing with a 998-point gain.

Trading volumes surged to 459.04 million shares, up from Wednesday's 400.2 million, with the total value of traded shares amounting to Rs18.7 billion.

Of the 469 companies whose shares were traded, 145 closed higher, 239 fell, and 85 remained unchanged. Kohinoor Spinning Mills led the market in volume, trading 35.2 million shares but losing Rs0.82 to close at Rs8.01 per share.

Foreign investors, however, sold shares worth Rs1.3 billion during the session, according to data from the National Clearing Company of Pakistan Limited (NCCPL).