PSX makes history by crossing 100k

KSE-100 index ends week at 101,357, up 3,559 points, despite political noise

KARACHI:

Pakistan Stock Exchange (PSX) reached a historic milestone during the outgoing week, when it surpassed the 100,000-point mark and closed at 101,357, with an increase of 3.6%.

The market came under pressure earlier in the week due to heightened political unrest, which led to significant selling and a decline of 3,500 points.

However, once protests were called off by the Pakistan Tehreek-e-Insaf (PTI), the market saw a strong recovery, bolstered by the banking sector over the removal of minimum deposit rate (MDR) for conventional banks, and the easing of inflation expectations.

Although foreign selling amounting to $15 million took place during the week, local buying by institutional investors, especially mutual funds and insurance companies, helped maintain the momentum.

Key economic indicators showed positive signs, such as a reduction in the government's bond yields in the range of 61 to 85 basis points (bps). In a T-bills' auction, the government raised Rs616 billion against the target of Rs800 billion.

Additionally, there was growth in auto financing and an increase in the country's foreign currency reserves, following receipt of $500 million in loan from the Asian Development Bank (ADB).

With investor sentiment elevated by those developments, the KSE-100 seems to be on a path to sustain its momentum in the coming week.

Day-to-day movement showed that at the commencement of the week, the bourse hit a new all-time high of 98,080 with a gain of 280 points, influenced by robust investor interest in the banking sector and some easing of political noise.

The following day, in a turbulent session, the KSE-100 registered its largest-ever single-day drop as it plummeted 3,506 points, or 3.57%, due to concerns over the rising political instability.

On Wednesday, the PSX saw a stunning display of resilience after the previous day's record slump, skyrocketing nearly 4,700 points – the biggest single-day surge in the bourse's history.

Next day, the stock market reached a historic milestone, with the PSX crossing the 100,000-point mark. Analysts linked the rally to improved investor sentiment, supported by declining interest rates and lower inflation, which enhanced the appeal of equities for higher returns.

On Friday, the market once again recorded a significant surge of nearly 1,300 points and spiked to a new all-time high above 101,000, driven by strong gains in the oil, banking and pharmaceutical sectors.

The benchmark KSE-100 index closed at 101,357, marking an increase of 3,559 points, or 3.64% week-on-week (WoW).

JS Global analyst Abdul Basit, in his review, commented that bullish momentum continued to prevail, with the limited decline being offset by a strong recovery after political protests were called off.

Average volumes marginally fell 1% WoW to 979 million shares while foreign selling came in at $15 million, which was offset by buying from mutual funds and insurance companies.

Basit said that developments in the banking sector regarding changes in the MDR kept activity high in bank stocks throughout the week. In addition, in the recent T-bills' auction, the government raised Rs616 billion against the target of Rs800 billion, where yields decreased 61-85 bps across different tenors.

Auto financing continued to recover for the second consecutive month in October 2024, reaching Rs236 billion, up 3.7% month-on-month, he said.

As per the latest data, the SBP's foreign currency reserves increased $131 million to $11.4 billion. Additionally, Pakistan received $500 million from the ADB under its climate financing programme, which would be reflected in reserves in the upcoming week, Basit added.

AHL Research, in its report, highlighted that the easing inflation and a strong rally in commercial banks were the key drivers for the PSX's strong recovery.

The Pakistani rupee marginally depreciated 0.10% WoW, concluding the week at Rs278.04 against the greenback.

Sector-wise, positive contribution came from commercial banks (1,676 points), technology and communication (349 points), oil and gas exploration companies (284 points), oil and gas marketing companies (260 points) and cement (234 points), AHL said.

Stock-wise, positive contributors were Habib Bank Ltd (694 points), Bank AL Habib (538 points), Pakistan Petroleum (274 points), Systems Ltd (255 points) and Bank Alfalah (205 points).

AHL added that they "anticipate the market to sustain its positive momentum in the coming week, driven by expectations of a further decline in inflation," with inflation projection for November at 4.7%.

Furthermore, it said, certain stocks were trading at attractive valuations, which were likely to continue enticing investor interest.

Foreign selling was witnessed during the outgoing week, which amounted to $15.1 million compared to net selling of $32.9 million last week.