PSX's unstoppable rally continues

KSE-100 index hits new peak as it nears 110,000-point mark

KARACHI:

Pakistan Stock Exchange (PSX) on Monday surged to another record high as the KSE-100 index gained over 900 points, powered by extensive institutional buying and widespread optimism about the policy rate reduction in the upcoming monetary policy announcement.

In the morning, the market opened with negative sentiment due to concerns over the advance-to-deposit ratio (ADR) condition for banks, which caused a decline of 1,424 points in the index. However, when local institutions entered the market, it moved into the positive territory and reached the intra-day high of 110,359 points before the close of trading.

The rally was driven by the decline in government bond yields, speculation about a larger policy rate cut by the State Bank of Pakistan (SBP) and the stabilising rupee. Analysts highlighted that a rise in global crude oil prices further fuelled investor optimism.

Traded activity was strong with notable contribution to the traded volume coming from stocks such as K-Electric, WorldCall Telecom and Cnergyico PK.

Top value contributors were Mari Petroleum, Lucky Cement, Systems Limited, Engro Corporation and The Searle Company, which collectively added 910 points.

In his analysis, Ahsan Mehanti of Arif Habib Corp commented that stocks closed at a new all-time high after a drop in the government's bond yields and speculation about an imminent larger rate cut in the SBP's monetary policy announcement.

Additionally, he noted, the stabilising rupee due to the growing foreign currency reserves, the surge in global crude oil prices and the upbeat economic indicators played the role of catalysts in the record close at the PSX.

At the end of trading, the benchmark KSE-100 index recorded an increase of 916.44 points, or 0.84%, to 109,970.39.

Topline Securities cited in its review that the market opened with concerns over the ADR's impact on banks, declining 1,424 points. However, as local institutions entered the market, it reversed course and moved into the positive territory, reaching the intra-day high of 110,359.

Trading activity remained robust with a total volume of 1,598 million shares and a turnover of Rs60 billion. K-Electric dominated the volume charts, with 164 million shares changing hands, Topline added.

In its research report, AHL commented that the 110k level was unlocked in Monday's session with a 0.84% day-on-day gain.

Some 64 shares rose while 34 fell, with Mari Petroleum (+9.62%), Lucky Cement (+4.71%) and Systems Limited (+4.37%) contributing the most to the index gains.

Banks including MCB Bank (-4.53%), HBL (-4.04%) and Bank Alfalah (-6.3%) were the biggest index drags following news that the prime minister had formed a committee to address the ADR issue. The committee has been tasked with reviewing the fiscal and regulatory measures to ensure the effective management of ADR. AHL added that near-term support to the market had risen to 107,500 points.

JS Global analyst Muhammad Hasan Ather wrote that the KSE-100 index maintained its bullish momentum, with investor confidence fuelled by the improving macroeconomic indicators, including a seven-year low inflation rate of 4.9% and growing expectations of interest rate reduction.

He added that market sentiment received an additional boost as Saudi Arabia extended a $3 billion deposit with Pakistan for another year and formalised seven memoranda of understanding (MoUs) into contracts worth $560 million.

However, banking stocks came under pressure amid concerns over the potential tax reforms.

Overall trading volumes decreased to 1.6 billion shares against Friday's tally of 1.7 billion. The value of shares traded during the day was Rs60.3 billion.

Shares of 467 companies were traded. Of these, 278 stocks closed higher, 158 fell and 31 remained unchanged.

K-Electric was the volume leader with trading in 164.5 million shares, increasing Rs0.42 to close at Rs6.16. It was followed by WorldCall Telecom with 161.9 million shares, gaining Rs0.08 to close at Rs1.83 and Cnergyico PK with 113 million shares, gaining Rs0.26 to close at Rs7.13.

During the day, foreign investors bought shares worth Rs401.9 million, according to the NCCPL.