PSX at peak on Fitch bank outlook

Strong earnings, stable rupee drive index up by 1,705 points to above 148k

KARACHI:

The Pakistan Stock Exchange (PSX) soared to a new all-time high on Monday, propelled by Fitch's positive outlook on Pakistan banks and Moody's upgrade of the country's rating to Caa1. Strong earnings, rupee stability and optimism about Pakistan-US trade and investment deals strengthened investor sentiment, driving the KSE-100 index up by 1,705 points to above 148,000.

Ahsan Mehanti of Arif Habib Corp commented that stocks closed at a new all-time high as Fitch Ratings provided investors with a brighter outlook on Pakistan banks amid Moody's rating upgrade to Caa1. A strong earnings outlook, rupee stability, speculation about Pakistan-US trade and investment deals and the government seeking further US export tariff incentives led the PSX to a record close, he said.

At the end of trading, the benchmark KSE-100 index recorded an increase of 1,704.79 points, or 1.16%, and settled at 148,196.42.

According to Topline Securities, bulls staged a strong comeback in Monday's trading session, with the KSE-100 index surging 1,904 points intra-day before closing at an all-time high of 148,196, up 1,705 points. Market sentiment brightened on reports of the government's circular debt reform drive, which entails reducing liquefied natural gas (LNG) cargoes, revising RLNG pricing and mobilising funds from savings through LNG diversion, state-owned enterprises' dividends and power sector receivables, it said.

Detailed proposals are expected to be announced next week, sustaining investor optimism. Heavyweights such as Lucky Cement, Meezan Bank, Bank AL Habib and Pakistan Petroleum contributed a combined 756 points to the index's upward momentum, Topline added.

Arif Habib Limited (AHL), in its report, remarked that the PSX kicked off the new week on a bullish note, resuming its northbound journey and closing above 148,000 at 148,196, higher by 1,705 points. The rally was fuelled by Fitch's latest outlook on Pakistan's banking sector, highlighting improving macro conditions, ongoing reforms and stronger capital buffers as key positives.

Fitch expects lower interest rates, better credit growth and reduced reliance on public-sector lending to benefit banks. However, it also flagged risks tied to the sovereign health, inflationary pressures and dependence on state-linked exposures. The positive sentiment drove robust buying in key banking names including Meezan Bank, Bank AL Habib, UBL and Bank Alfalah, which contributed 619 points to the index, AHL said.

Moreover, media reports suggested that the government may cut LNG imports to two cargoes per month, down from three to four cargoes, as part of efforts to reduce the gas-sector circular debt and improve fiscal sustainability.

The brokerage house noted that the progress on circular debt resolution may sustain the bullish momentum, though consolidation or a mild correction was possible.

JS Global analyst Muhammad Hasan Ather said that the KSE-100 index surged 1.2% to close at a record high, driven by strong corporate earnings, improved macroeconomic indicators and expectations of favourable inflation data. Investor sentiment was further lifted by enhanced liquidity, rising remittances and optimism about circular debt reforms. The financial sector benefited from a 12.5% year-on-year rise in bank deposits, he said.

Looking ahead, the market is expected to remain buoyant amid ongoing earnings season and clarity on fiscal measures, including the potential phasing out of super tax, Ather stated.

Overall trading volumes increased to 610.3 million shares compared with Friday's tally of 473.6 million. Traded value rose to Rs39.2 billion as compared to Rs32.9 billion in the previous session.

Shares of 487 companies were traded. Of these, 283 stocks closed higher, 175 dropped and 29 remained unchanged.

WorldCall Telecom was the volume leader with trading in 40.7 million shares, falling Rs0.01 to close at Rs1.40. It was followed by Pervez Ahmed Consultancy with 29.8 million shares, gaining Rs0.18 to close at Rs2.82 and Al-Shaheer Corporation with 26.4 million shares, gaining Rs0.52 to close at Rs12.24. Foreign investors sold shares worth Rs625 million, the National Clearing Company reported.