Policy rate cut propels PSX to record high

KARACHI:

Pakistan Stock Exchange (PSX) surged to a new all-time high on Monday as the KSE-100 index climbed nearly 1,100 points to close just short of the 92,000 mark.

Investor optimism was fueled by expectations of a substantial policy rate cut by the State Bank of Pakistan (SBP) later in the day, after a recent 3.6% reduction in National Savings Scheme (NSS) rates due to the easing inflation, which fell to 7.2% in October.

Major catalysts for the rally included Qatar's $3 billion investment commitment and Saudi Arabia's $2.8 billion investment pledge, alongside an 18% increase in petroleum product sales in October and continued stability of the Pakistani rupee.

"Stocks closed at an all-time high as investors eyed a major SBP rate cut later in the day after NSS rates were slashed up to 3.6% owing to a lower inflation reading of 7.2% for October," said Arif Habib Corp Managing Director Ahsan Mehanti.

Investment commitments of $3 billion from Qatar and $2.8 billion from Saudi Arabia, upbeat petroleum sales data that showed a surge of 18% in October and rupee stability played the role of catalysts in record close at the PSX, he added.

At the end of trading, the benchmark KSE-100 index posted an impressive surge of 1,078.15 points, or 1.19%, and settled at 91,938.01.

Topline Securities, in its report, said that Pakistan stocks continued their remarkable ascent, extending the record-breaking rally as investors eagerly awaited the monetary policy review.

Key contributors to the market's surge were Systems Limited, Lucky Cement, Cherat Cement, Hubco and Engro Corporation, which collectively added 611 points to the index, it added.

In its review, AHL wrote that the KSE-100 index reached close to the 92,000 mark at the start of the week, gaining 1.19% day-on-day.

Some 73 stocks advanced while 25 declined, with Systems Limited gaining 9.35%, Lucky Cement rising 3.93% and Cherat Cement climbing 8.85% – the biggest contributors to the index gains.

Pakistan Petroleum Limited (PPL), down 2.72%, MCB Bank, losing 2.54%, and Habib Bank Limited, falling 1.43%, were the major drags on the index, it said.

Notably, PPL will face a cash outflow related to a lease payment on the Sui gas field, which may affect expectations for a large dividend payout.

Later, the State Bank of Pakistan announced a larger-than-expected policy rate reduction of 250 basis points to 15%. "This move is expected to further strengthen the KSE-100 index, which may experience a strong upward gap on Tuesday," AHL added.

JS Global analyst Mohammed Waqar Iqbal wrote that the KSE-100 soared to an all-time high of 91,938, closing with an impressive gain of 1,078 points.

The market started strong, reaching the intra-day peak of 92,159, driven by significant investor interest in cement, energy, power and fertiliser sectors.

"Looking ahead, we recommend that investors consider a buy-on-dips strategy, particularly focusing on cement, fertiliser, automobile, E&P and technology sectors," the analyst said.

Overall trading volumes increased to 589.5 million shares compared with Friday's tally of 465.9 million. The value of shares traded during the day was Rs29.96 billion.

Shares of 445 companies were traded. Of these, 258 stocks closed higher, 140 fell and 47 remained unchanged.

Power Cement was the volume leader with trading in 56.7 million shares, gaining Rs0.97 to close at Rs7.12. It was followed by K-Electric with 38.9 million shares, gaining Rs0.18 to close at Rs4.85 and Maple Leaf Cement with 36.96 million shares, gaining Rs2.75 to close at Rs41.53.

During the day, foreign investors sold shares worth Rs520.1 million, according to the NCCPL.