Stocks soar to record on budget optimism

IMF tranche, 90bps drop in bond yields drive index up by 1,425 points

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KARACHI:

The Pakistan Stock Exchange (PSX) on Thursday roared back to life as the benchmark KSE-100 index soared by over 1,400 points, not only recouping the previous day's thin loss but also closing at an all-time high.

The sudden shift in momentum was powered by macroeconomic developments, which restored investor confidence. These included the arrival of the much-anticipated second tranche of $1,023 million from the International Monetary Fund (IMF). Investors welcomed the inflow as a sign of confidence in Pakistan government's reforms as well as international support. A sharp drop of up to 90 basis points (bps) in bond yields also boosted investor expectations.

There was growing speculation about the upcoming federal budget. Investors were weighing the IMF's record-high revenue collection target for fiscal year 2025-26.

Earlier, when trading commenced, the sentiment turned bullish. Buying was broad-based, with investors pouring capital into cyclical stocks, banks, energy firms and cement companies; all of which tend to benefit from the country's economic recovery and falling interest rates.

Arif Habib Corp MD Ahsan Mehanti wrote "stocks closed at an all-time high amid a slump in cut-off yields of government bonds up to 90 bps and receipt of $1 billion in IMF tranche." Rupee stability and pre-budget optimism, fuelled by the IMF's projection of Rs20 trillion worth of revenue collection and 3.6% growth for FY26, were the key catalysts for the bullish close at the PSX, he added.

At the end of trading, the benchmark KSE-100 index registered a substantial increase of 1,425.39 points, or 1.20%, and settled at 119,961.91.

Topline Securities, in its review, stated that bulls took charge of the local bourse as the market surged to new heights, fuelled by the optimism surrounding the upcoming budget announcement. The benchmark index recorded a remarkable intra-day rally and refinery stocks ended in the green amid sector-specific developments.

It pointed out that the government was working to finalise a binding legal framework between the oil marketing companies (OMCs) and refineries, with key clauses like take-or-pay aimed at resolving the dispute over product lifting and diesel imports - a move expected to bring greater clarity and stability to the supply chain.

Arif Habib Limited (AHL) observed that the upside resumed with the KSE-100 gaining 1.2% day-on-day to close in on the 120,000 level.

A total of 70 shares rose while 21 fell, where United Bank (+3.13%), Engro Holdings (+2.56%) and Hub Power (+2.49%) contributed the most to index gains. On the other hand, Lucky Cement (-1.03%), Pakgen Power (-5.3%) and Nishat Mills (-3.14%) were the biggest drags, it said.

Among major news, Hub Power announced that Prime International Oil and Gas, a joint venture of Hub Power Holdings, had become successful in its bid for onshore exploration blocks namely Sikhpur-II and Naing Sharif. The 120,000 mark remains a key level ahead of the week's close, AHL added. KTrade Securities wrote in its market wrap that investor interest was buoyed by reports that the Petroleum Division had sought the prime minister's approval for an increase in profit margins of OMCs and petroleum dealers as well as to offset refinery losses.

Additionally, the easing geopolitical tensions continue to support market sentiment. Looking ahead, it expected investor confidence to remain strong amid improving macroeconomic conditions.

Overall trading volumes increased to 699 million shares compared with Wednesday's tally of 609.1 million. The value of shares traded during the day stood at Rs39.1 billion.

Shares of 458 companies were traded. Of these, 312 stocks closed higher, 107 fell and 39 remained unchanged.

Pakistan Refinery was the volume leader with trading in 50.8 million shares, rising Rs2.68 to close at Rs33.82. It was followed by Cnergyico PK with 47.6 million shares, gaining Rs0.48 to close at Rs7.85 and K-Electric with 40.2 million shares, adding Rs0.16 to close at Rs4.45. During the day, foreign investors sold shares worth Rs1.11 billion, the National Clearing Company reported.