PSX at new high on rate cut belief
Pakistan Stock Exchange (PSX), while extending its record-eclipsing spree, hit a new all-time high on Monday as the rally was spurred by the corporate earnings season and optimism about further policy rate reduction by the State Bank of Pakistan (SBP) early next week.
In the morning, trading began on a strong note, with the KSE-100 index climbing to its intra-day high of 91,054.83 points around midday.
The rally was attributed to some easing of geopolitical tensions in the Middle East, a $2.75 billion support package from the Asian Development Bank (ADB) for Pakistan over the next four years and government plans to privatise state-owned enterprises (SOEs).
As the day progressed, profit-taking pulled the index below 91,000, when it touched the intra-day low of 89,732.73 points. Despite significant volatility, the market recovered to end trading above the 90k mark with modest gains.
"Stocks closed at a new all-time high in an earnings season rally as investors speculated about a major rate cut by the State Bank early next week," said Ahsan Mehanti, Managing Director of Arif Habib Corp.
"Bullish global equities due to the easing of Middle East unrest fears, $2.75 billion in ADB budget support over four years and government's deliberation on the privatisation of SOEs played the role of catalysts in bullish activity at the PSX."
At the close of trading, the benchmark KSE-100 index recorded a rise of 201.55 points, or 0.22%, and settled at 90,195.52.
Topline Securities, in its report, wrote that Monday's trading session exhibited significant volatility, with the index reaching a high of 91,055 and a low of 89,733 as investors took advantage of profit opportunities.
"However, upward momentum was driven by expectations of a rate cut in the upcoming monetary policy, alongside strong corporate earnings. Furthermore, investor sentiment was bolstered by the announcement of a loan of $1.4 billion being sought from China," it said.
Key contributors to the index were Systems Limited, Colgate-Palmolive, Pakistan State Oil, Pakistan Oilfields and Pakistan Petroleum, which collectively added 341 points, Topline added.
Arif Habib Limited (AHL), in its report, said that the PSX witnessed a volatile session at a time when the earnings season was in full swing.
Some 43 shares rose while 54 fell on the KSE-100 index with Systems Limited (+4.21%), Colgate-Palmolive (+6.81%) and Pakistan State Oil (+4%) being the biggest contributors to the gains.
On the other hand, Fauji Fertiliser (-2.17%), Engro Corporation (-1.66%) and Millat Tractors (-3.02%) were the biggest index drags, AHL said, adding that among major corporate results Lucky Cement (+0.73%) announced unconsolidated 1QFY25 earnings per share of Rs22.40, down 5% year-on-year.
JS Global analyst Mohammed Waqar Iqbal said that the KSE-100 sustained its momentum on Monday, where local investors opted to book profits around the 90,000-point level.
"Despite this, these investors continued to drive the rally, fueled by strong corporate profits and expectations of interest rate cut in the monetary policy meeting on November 4," he said.
"Going forward, profit-taking at current levels is advisable, with a close watch on buying opportunities during market dips," the analyst added.
Overall trading volumes decreased to 567.3 million shares compared with Friday's tally of 695.5 million. The value of shares traded during the day was Rs29.2 billion.
Shares of 456 companies were traded. Of these, 179 stocks closed higher, 222 fell and 55 remained unchanged.
Fauji Foods was the volume leader with trading in 53.6 million shares, gaining Rs0.43 to close at Rs10.44. It was followed by K-Electric with 29.9 million shares, losing Rs0.22 to close at Rs4.36 and Sui Southern Gas Company with 27.4 million shares, gaining Rs0.85 to close at Rs12.83.
During the day, foreign investors bought shares worth Rs409.7 million, according to the NCCPL.