PSX extends bullish streak by hitting new peak

Pakistan Stock Exchange (PSX) continued its bullish momentum in the outgoing week during which the KSE-100 index soared to a record peak above 85,500 points as scores of positive economic developments sparked investor interest.

Stock buying by local investors offset foreign fund outflows and a Saudi delegation signed investment agreements with Pakistan. Such factors aided bull-run at the bourse, which rose nearly 2,000 points during week. Though fears emerged following the abrupt termination of contracts of some independent power producers (IPPs), increased interest of investors in exploration and production stocks, record remittances in first quarter and a further increase in foreign currency reserves created optimism in the market.

Day-to-day performance showed that on Monday the bourse received extensive support from strong performances by blue-chip oil stocks in anticipation of impressive results in the ongoing earnings season.

The KSE-100 index extended its rally on Tuesday, gaining over 750 points, driven by robust investor interest in blue-chip oil stocks and a positive economic outlook. On Wednesday, stocks inched up amid high volatility and closed almost flat despite gains in the banking sector. Following day, the market slipped in the wake of concerns over IPP contracts as it snapped a record-breaking streak with a decline of over 200 points.

PSX made a marginal recovery in late trading on Friday, where it crept up 30 points owing to a strong earnings outlook for banking and auto sectors. The benchmark KSE-100 index ended the week with an increase of 1,951 points, or 2.34% week-on-week (WoW), and settled at 85,483.

JS Global analyst Wadee Zaman, in his review, wrote that the KSE-100 continued its bullish momentum throughout the week, posting a significant growth of 2.3% WoW. Average volumes increased 52% WoW to 523 million shares. Despite significant foreign outflows of $23 million, the index remained elevated, supported by local buying, mainly led by mutual funds and insurance companies, amid positive economic developments, he said.

Main highlights of the week were termination of five IPP contracts, including for Hub Power's base plant, and the signing of memoranda of understanding (MoUs) worth $2.2 billion across various sectors during the visit of a Saudi delegation. There was also notable progress on the Reko Diq copper and gold mining project, with the Saudi minister of investment announcing that Manara Minerals was poised to acquire a stake in the project, Zaman pointed out.

Meanwhile, Pakistan Automotive Manufacturers Association released numbers for September 2024, showing a 23% and 20% growth in year-on-year (YoY) and month-on-month (MoM) auto sales, respectively.

Remittances for September came in at $2.85 billion, up 29% YoY and down 3% MoM. Also, the State Bank's reserves increased $106 million to $10.8 billion, the JS analyst added.

Arif Habib Limited (AHL), in its report, observed that the market displayed a remarkable performance during the outgoing week by reaching an all-time high of 85,669 points on Wednesday. Shares of Oil and Gas Development Company and Pakistan Petroleum were the prime focus of attention for investors, given the publication of their latest detailed accounts, which reported almost 100% cash sales in 4QFY24, with a halt to the accumulation of circular debt, it said.

In addition, the visit of a Saudi delegation sparked optimism about investment deals. In addition, the country received record remittances of $8.8 billion in the first quarter of FY25, marking a 39% YoY increase.

The government bought back T-bills amounting to Rs475 billion while net investment through the Roshan Digital Account reached $1.53 billion.

Sector-wise positive contribution came from commercial banks (1,015 points), exploration and production (628 points), fertiliser (328 points), oil marketing companies (288 points) and pharmaceuticals (120 points).

Foreigners' selling continued during the week under review, clocking in at $22.6 million compared to net selling of $26.1 million last week, AHL added.