PSX hits historic high with 7.6% rise

Index ends at 109,054 as inflation eases; cement, oil, banking stocks lead rally

KARACHI:

Pakistan Stock Exchange (PSX) continued its bullish run in the outgoing week, with the KSE-100 index closing at an all-time high of 109,054, a historic high and marking a weekly gain of 7.6% (7,697 points).

Improved macroeconomic indicators fueled the rally, including a drop in inflation to 4.9%, the lowest since April 2018, and the extension of Saudi Arabia's $3 billion deposit for another year. Key developments included Pakistan formalising $560 million worth of contracts signed with Saudi Arabia, a government auction raising Rs353 billion through the Ijarah Sukuk and petroleum sales hitting a 25-month high of 1.58 million tons in November.

Cement dispatches climbed 6% year-on-year (YoY) to 4.15 million tons, reflecting robust construction activity. Sector-wise, fertiliser, banks, oil and gas exploration, cement and power generation led the index's gains. Heavyweights like Mari Petroleum, Engro Corp and UBL were the top contributors while foreign investors offloaded shares worth $12.2 million, offset by local buying from mutual funds and banks.

Despite foreign selling, the week witnessed record average daily trading volumes of 1.68 billion shares (+72% week-on-week – WoW) and a surge in traded value to $198 million (+49% WoW), making the KSE-100 the world's best-performing market in terms of US dollar return.

Day-to-day movement showed that at the commencement of the week, the stock exchange boasted a remarkable surge of over 1,900 points to 103,275 on the back of positive economic data such as CPI inflation for November, which showed an easing to 4.9% YoY, sparking expectations of a further cut in the State Bank of Pakistan's (SBP) policy rate.

The following day, the PSX extended its record-breaking spree as it soared to a fresh peak while traded value reached its highest level in 18 years at Rs57 billion.

On Wednesday, the PSX continued to enjoy its record-eclipsing streak as the KSE-100 surged past 105,000 points on the back of investor optimism, easing inflation and economic stability.

Next day, the market, while shattering records, set an unprecedented pace of rapid growth as the index surged a massive 3,134 points, surpassing the 108,000 mark.

On Friday, the bourse maintained its bullish momentum with a further increase of over 800 points to a new record high above 109,000. The rally was driven by investors' buying of select oil and banking-sector stocks ahead of the policy rate announcement next week. The KSE-100 index posted its seventh consecutive weekly gain with a surge of over 7% WoW.

AHL Research in its weekly report said "bulls remained invincible at around 109,000 level." The market surged to a record high of 109,478 points, driven by improved inflation data, which dropped to 4.9% - the lowest level since April 2018.

Additionally, Saudi Arabia extended the $3 billion deposit for another year to support Pakistan's economy, providing further momentum to the index. Furthermore, Pakistan has converted seven out of the 37 MoUs signed with Saudi Arabia into formal contracts worth $560 million.

During the week, the PSX held an auction of Ijarah Sukuk where the government raised Rs353 billion against the target of Rs500 billion. In addition, petroleum sales clocked in at a 25-month high of 1.58 million tons during November, up 15% YoY.

Also, cement dispatches climbed up by 6% YoY to 4.15 million tons in November. The SBP's reserves rose by $620 million to $12 billion, which reflected a $500 million loan from the ADB for the climate programme.

The market closed at 109,054 points, up 7,697 points, or 7.59% WoW, becoming the world's best-performing market based on the US dollar return.

Sector-wise, positive contribution came from fertiliser (1,748 points), commercial banks (1,434 points), oil and gas exploration companies (1,148 points), cement (716 points) and power generation (405 points).

Scrip-wise positive contributors were Mari Petroleum (866 points), Engro Corp (626 points), UBL (570 points), FFC (506 points) and Meezan Bank (402 points).

Foreign selling continued during the week, clocking in at $12.2 million compared to net selling of $15.1 million last week.

AHL anticipated the market to continue with the positive momentum in the coming week in anticipation of a rate cut in the upcoming monetary policy committee meeting on December 16.

"The KSE-100 index was at all-time high levels," wrote JS Global analyst Muhammad Waqas Ghani in his report.

He said that the bullish momentum continued, which took the KSE-100 to the all-time high level of 109,054, an increase of 7.6% WoW. Average volumes rose 72% WoW to 1,683 million shares. The week started with inflation data for November, which clocked in at 4.9% YoY, marking the lowest CPI reading in 6.5 years. The decline was mainly due to the elevated base effect.

Moreover, trade data revealed a 7.4% YoY reduction in the trade deficit during the first five months of the current fiscal year, which stood at $8.65 billion, compared to $9.3 billion during the same period of last year.

Banking sector stocks gained momentum as banks continued to work towards meeting the advances-to-deposit ratio (ADR) target. Latest data showed a sharp rise in the banking sector's gross ADR as it reached a 17-month high at 47%.

In other news, the government raised prices of petrol and diesel by Rs3.7/litre and Rs3.3/litre, respectively. Furthermore, Saudi Arabia agreed to extend the $3 billion deposit with the SBP for another year, offering vital support to Pakistan's forex reserves, the analyst added.