Stocks hit record on positive cues

KARACHI:

Pakistan Stock Exchange (PSX) maintained its bullish momentum in the outgoing week as it surged past 83,500 points, marking another record peak in an impressive rally.

The market's growth reflected a positive shift in economic indicators and the restoration of investor confidence following recent volatility.

Key factors driving the positive momentum included inflation declining to a 44-month low at 6.9% in September 2024 and the repurchase of treasury bills worth Rs351 billion by the government at significantly reduced rates.

During the week, the Pakistani rupee remained strong against the US dollar in the inter-bank market and the State Bank of Pakistan's (SBP) foreign exchange reserves increased $1,168 million to $10,702 million following receipt of the first loan tranche of $1,026.9 million from the International Monetary Fund (IMF). After a negative start to the week, when the KSE-100 index shed 178 points due to political uncertainty and foreign fund outflows, the market rebounded strongly on Tuesday.

A wave of positive economic data including a lower inflation, stabilising rupee, decreasing global commodity prices and the growth in agriculture sector fueled the turnaround.

Next day, the KSE-100 continued its upward trajectory, again on the back of scores of positive indicators. The bourse maintained its robust rally on Thursday, inspired by the treasury bill repurchase programme of the government with the index climbing nearly 800 points in intra-day trading.

In a new milestone, the PSX crossed the 83,500 mark on Friday for the first time in history amid extensive investor buying, fueled by strong interest in blue-chip stocks and a fall in government's bond yields.

At the end of the week, the benchmark KSE-100 index stood at 83,532 points, with substantial gains of 2,240 points, or 2.76% week-on-week (WoW).

JS Global analyst Abdul Basit, in his report, wrote that the KSE-100 index continued its bullish momentum throughout the week, posting a significant growth of 2.8% WoW and settling at 83,532. Average volumes dropped 12% WoW to 344 million shares.

He highlighted that despite significant foreign fund outflows of $26 million, the index remained elevated, driven by local buying mainly led by mutual funds amid positive economic developments.

He said Pakistan's ongoing sharp disinflationary trend continued with an almost four-year low Consumer Price Index (CPI) reading for September 2024 at 6.9% - the lowest since January 2021.

Also, the SBP's reserves increased to $10.7 billion – a 29-month high, after the disbursement of IMF's first tranche under the 37-month Extended Fund Facility (EFF).

In a recent T-bill auction, the government raised Rs244 billion against the target of Rs250 billion, where yields for six-month and 12-month papers settled at 14.398% and 13.735%, respectively – the lowest since April 2022.

Furthermore, Pakistan's trade deficit widened 4% year-on-year in 1QFY25 while exports went up 14% YoY during the same period.

On the other hand, the revenue collection target was missed by Rs87 billion during the first quarter of FY25 with collections standing at Rs2,452 billion against the target of Rs2,539 billion, the JS analyst added.

Arif Habib Limited (AHL), in its report, noted that the stock market maintained its positive momentum and closed at an all-time high of 83,532 points. "This upward trajectory was supported by several significant economic developments," it said.

Among these, inflation declined to a 44-month low of 6.9% in September 2024 and the government initiated a buyback programme for treasury bills worth Rs351 billion at significantly reduced rates.

In addition, the country's gross domestic product (GDP) recorded a growth of 2.52% in FY24, driven by the agriculture sector. Trade deficit reached $5.4 billion in Q1 (July-September) while exports achieved the sixth highest quarterly figure of $7.9 billion.

Furthermore, the Pakistani rupee appreciated against the US dollar, closing at Rs277.5. Sector-wise positive contributors to the stock market were fertiliser (716 points), oil and gas exploration (585 points), commercial banks (297 points), cement (241 points) and oil and gas marketing companies (122 points).

Among individual stocks, positive contributors were Fauji Fertiliser Company (512 points), Pakistan Petroleum Limited (222 points), Oil and Gas Development Company (212 points), United Bank Limited (108 points) and Pakistan Oilfields (98 points). Foreigners' selling continued during the week under review, clocking in at $26.1 million compared to net selling of $10.5 million in the previous week.