PSX soars on rate cut optimism
The Pakistan Stock Exchange (PSX) on Monday witnessed a remarkable surge, driven by bullish market sentiment and investor optimism. Stocks across various sectors rallied as investors anticipated a significant rate cut by the State Bank of Pakistan (SBP), fuelled by low inflation and a decrease in short-term government bond yields nearing 11.99%.
The upward momentum was further supported by strong buying activity from local institutions in key sectors, including autos, E&Ps, and refineries. Additionally, anticipation of the upcoming monetary policy review, alongside easing political noise, upbeat economic indicators, and trade balances, played a critical role in the record surge at PSX.
According to Ahsan Mehanti of Arif Habib Corp, stocks were bullish, led by scrips across the board as investors expected a significant SBP rate cut amid thin inflation and a cut in short-term government bond yields near 11.99%. He added that easing political noise, resolve over IPP contracts, and upbeat economic indicators for trade balances, FX reserves, and remittances played a catalyst role in the record surge at PSX.
At the end of trading, the benchmark KSE-100 index recorded a surge of 1,867.61 points, or 1.63%, to 116,169.41.
Topline Securities commented in its market review that the market continued its strong upward momentum, extending its record-breaking rally as investors anticipated the upcoming monetary policy review scheduled for today. This was further bolstered by significant buying activity from local institutions, with the index hitting an intraday peak of 116,682, it added.
Topline noted that the rise in the index was primarily driven by strong performances from Mari Petroleum, Fauji Fertiliser Company, Pakistan Petroleum Ltd, Oil and Gas Development Company, and The Hub Power Company, which collectively contributed 1,749 points.
Trading activity remained lively, with a total volume of 1,469 million shares and a turnover of Rs66 billion. WorldCall Telecom led the volume charts, with 403 million shares traded during the session, it added. Arif Habib Limited (AHL) stated in its report that the KSE-100 index saw new highs for all benchmarks, gaining 1.6%.
Forty-eight shares rose while 51 fell, with Mari Petroleum (+9.94%), Fauji Fertiliser Company (+5.18%), and Oil and Gas Development Company (+4.64%) having the biggest index contributions. UBL (-1.34%), Lucky Cement (-1.48%), and MCB (-1.48%) were the biggest index drags, it added.
The first indication with regards to waning index momentum will be a divergence between the key benchmark indices, with one failing to make a new high. Currently, such a situation hasn't arisen, AHL said.
For now, the key index benchmarks are all making new highs in unison, and the path of least resistance remains to the upside, it added.
JS Global Analyst Muhammad Hasan Ather commented that the KSE-100 index soared in anticipation of a major policy rate cut.
Key sectors such as Autos, E&Ps, and Refineries saw strong buying momentum. Investor confidence ahead of the SBP's Monetary Policy Committee meeting suggests a positive long-term outlook, signalling growth potential for the stock market, Ather added. He noted that the equity market is expected to maintain its positive momentum, supported by rate cuts driving capital flows from fixed income to equities, likely resulting in further re-rating of the market.
Shares of 477 companies were traded. Of these, 246 stocks closed higher, 194 fell, and 37 remained unchanged.
WorldCall Telecom was the volume leader, with trading in 403.2 million shares, gaining Rs0.13 to close at Rs1.92. It was followed by Cnergyico PK, with trading in 59.5 million shares, gaining Rs0.11 to close at Rs7.12, and Pak Refinery, with 54.7 million shares, gaining Rs2.72 to close at Rs36.52.
During the day, foreign investors sold shares worth Rs473.2 million, the NCCPL reported.