PSX enters uncharted territory on robust liquidity

KARACHI:

In a historic milestone, the Pakistan Stock Exchange (PSX) soared to unprecedented highs in the outgoing week and crossed the 99,000-point barrier in intra-day trading on Friday. Though the KSE-100 index retreated to around 97,800 later, it still closed at a record high, with gains of over 4,500 points.

The stunning rally reflected a combination of favourable macroeconomic indicators, robust fundamentals and high liquidity, encouraging investors to engage in extensive stock buying. Among the notable developments, Pakistan posted a current account surplus of $218 million for the first four months of FY25 and the State Bank of Pakistan (SBP) raised Rs350 billion in an auction of Pakistan Investment Bonds (PIBs), where yields fell up to 19 basis points.

Power generation saw a 7.2% year-on-year rise to 10,262 gigawatt hours (GWh) in October 2024 as for the first time in 13 months, the actual output exceeded the reference generation by 0.7%.

Day-to-day movement showed that at the commencement of the week, the bourse hit a new all-time high of 94,996 points, buoyed by a positive shift in the economic outlook as October's current account posted a surplus of $349 million compared to a deficit of $287 million last year.

The following day, the KSE-100 index soared to another record high, reaching 96,036 in intra-day trading and closing at 95,857, with a gain of over 850 points.

The market remained volatile on Wednesday amid political noise and profit-taking, when the index lost early gains and ended lower by 310 points.

Next day, the upbeat economic data drove stocks higher by 1,782 points as the index shattered the previous record, surging past the 97,000 mark for the first time in history.

On Friday, it reached a historic milestone and crossed the 99,000 mark in intra-day trading before retreating amid a seven-and-a-half-year high market activity.

The benchmark KSE-100 index closed at 97,798 points, marking a sharp increase of 4,506 points, or 3.2% week-on-week (WoW).

JS Global Deputy Head of Research Muhammad Waqas Ghani commented, in his report, that bullish momentum continued, which took the KSE-100 index to the all-time high of 97,798, an increase of 3.2% WoW. Average volumes increased 13% to 991 million shares. According to data released by the SBP, Pakistan recorded a third consecutive monthly current account surplus of $349 million in October 2024, resulting in a cumulative surplus of $218 million for 4MFY25, compared to a deficit of $1.53 billion in the same period of last year.

Pakistan Bureau of Statistics (PBS) reported that large-scale manufacturing (LSM) registered a 1.9% year-on-year (YoY) decrease in September 2024, the second straight month of negative growth. The overall growth was negative, but notable improvement continued in many pivotal sectors, Ghani said.

Market sentiment improved following the finance minister's assurance that no mini-budget or new tax measures would be introduced after successful talks with an International Monetary Fund (IMF) team.

Additionally, banking sector stocks gained momentum as banks continued to work towards meeting the advance-to-deposit ratio (ADR) target. Data showed a 9% rise in the loan portfolio in October 2024 while deposits declined 3% month-on-month (MoM).

In the PIB auction, the government raised Rs368 billion against the target of Rs300 billion whereas cut-off yields dropped in the range of 9 to 19 basis points, the JS deputy research head added.

AHL Research, in its report, highlighted that the stock market exhibited a stellar performance as it reached a historic milestone at 97,798 points. Following last week's impressive rally, the positive momentum continued, supported by favourable macroeconomic indicators, strong fundamentals and a robust liquidity, it said.

Key developments included a current account surplus of $218 million for 4MFY25. Also, power generation rose 7.2% YoY, reaching 10,262 GWh in October, with actual generation exceeding the reference generation by 0.7% for the first time in 13 months.

The SBP reported an increase in its foreign exchange reserves by $29 million WoW to $11.3 billion. Additionally, the Pakistani rupee depreciated marginally by 0.10%, ending the week at 277.96 against the US dollar.

Sector-wise, the positive contribution came from commercial banks (1,475 points), fertiliser (1,386 points), miscellaneous (112 points), pharmaceuticals (103 points) and chemicals (83 points).

Foreign selling was witnessed during the week, which amounted to $32.9 million compared to net selling of $10.6 million last week.