Stocks skyrocket as investor optimism returns
In stark contrast to the previous two days' downturn, the Pakistan Stock Exchange (PSX) rebounded in a remarkable fashion as it soared nearly 1,900 points and closed just shy of the record high.
Driven by expectations of a significant reduction in the State Bank of Pakistan's (SBP) policy rate, the KSE-100 index soared to the intra-day high of 91,133.28 points towards the close of trading.
Investors ignored the range-bound trading earlier in the day and bought attractive stocks in the latter half to add to their portfolios, taking cue from a single-digit inflation reading for October.
Additionally, the finance minister stated the other day that the International Monetary Fund (IMF) had lowered its inflation forecast for the current year by 3.2 percentage points to 9.5%.
"Stocks made a sharp recovery amid upbeat CPI inflation data, which showed a rise of only 7.2% in October, and a lower IMF inflation projection at 7.5% for FY25," said Ahsan Mehanti, Managing Director of Arif Habib Corp.
Speculation about a major cut in the SBP policy rate next week and the surge in forex reserves to $11.2 billion contributed to the record activity at the PSX, he added.
At the close of trading, the benchmark KSE-100 index posted an impressive surge of 1,893.08 points, or 2.13%, and settled at 90,859.85.
Topline Securities, in its commentary, wrote that stocks returned to the positive zone, largely led by Pakistan Petroleum Limited (PPL).
In its corporate briefing, the company reported a cash collection ratio exceeding 100% in 1QFY25 and indicated potential improvements in payouts in future due to a decline in receivables, it said.
The single-digit Consumer Price Index (CPI)-based inflation of 7.2% for October also provided a boost to investor sentiment as increased activity was observed in the second half of trading, Topline added.
Arif Habib Limited, in its report, remarked that the KSE-100 kick-started the new month on a strong note, with the index rising 2.13% day-on-day and 1.1% week-on-week.
The market's surge was led by PPL (+7.33%), Oil and Gas Development Company (+4.28%) and United Bank Limited (+2.78%).
Though October CPI came in at 7.2%, which was higher than expected, it was unlikely to prevent the SBP from cutting the policy rate in November 4 meeting, it said. Friday's session appeared to have ended a short correction of 3% and the market looked set to cross 92,000 points in the coming week, AHL added.
JS Global analyst Mohammed Waqar Iqbal wrote that bulls took charge, with the KSE-100 reaching the intra-day high of 91,133.
A notable price performance was observed in exploration and production, oil marketing companies and cement sectors. The index finally settled at 90,860, marking a substantial rise of 1,893 points, he said.
The analyst recommended investors to consider a buy-on-dips strategy, particularly focusing on cement, exploration and production, and technology sectors.
Overall trading volumes decreased to 465.9 million shares against Thursday's tally of 546.3 million. The value of shares traded during the day was Rs23.1 billion.
Shares of 430 companies were traded. Of these, 220 stocks closed higher, 156 fell and 54 remained unchanged.
Silkbank was the volume leader with trading in 62.5 million shares, losing Rs0.16 to close at Rs0.94. It was followed by K-Electric with 57.6 million shares, gaining Rs0.23 to close at Rs4.67 and WorldCall Telecom with 27.2 million shares, remaining unchanged at Rs1.22.
During the day, foreign investors bought shares worth Rs1.5 billion, according to the NCCPL.