PSX regains ground, ends up 1,767 points

Value buying drives increase in KSE-100 index despite geopolitical fears

KARACHI:

Pakistan Stock Exchange (PSX) on Wednesday staged a modest rebound as investors returned to accumulate selective blue chips after the previous session's sharp sell-off, with easing concerns over the Strait of Hormuz disruptions restoring confidence.

In the morning, the market got off to a flying start, when the benchmark KSE-100 index surged more than 3,000 points within the first hour of trading. It climbed to the intra-day high of 176,701.38 before profit-taking gradually eroded gains. The market still ended the session at a comfortably higher level at 175,285.78, gaining 1,766.97 points, or 1.02%.

Buying interest remained broad-based across commercial bank, investment bank, cement, automobile assembler, oil and gas exploration companies, oil marketing companies, refineries and power generation stocks, reflecting renewed appetite for fundamentally strong companies after Tuesday's rout.

The recovery indicated that investors had largely absorbed the previous day's geopolitical shock, although caution prevailed as market participants continued to monitor developments in the Middle East and their impact on global oil prices.

JS Global analyst Nawaz Ali said stocks made a modest rebound, supported by optimism about the potential easing of geopolitical tensions in the Middle East. Despite the recovery, overall participation remained lacklustre as investors seemed largely cautious.

"Going forward, we recommend a 'buy-on-dips' strategy as the market's underlying fundamentals are supportive. Nevertheless, investors should closely monitor developments surrounding the US-Iran relations as any geopolitical escalation could weigh on investor sentiment and trigger renewed market volatility," Ali said.

Ahmed Sheraz of KTrade Securities said the KSE-100 index rebounded strongly after the previous day's 3.56% plunge as investors regained confidence and buying momentum strengthened. He pointed out that trading began on a subdued note with low volumes before steadily picking up, reflecting the view that the previous sell-off had been an overreaction, particularly as Asian markets remained resilient and US markets closed higher overnight.

The sentiment was further supported by a stable geopolitical backdrop. Brent crude continued to trade around $85-86 per barrel, while US President Donald Trump announced that no fee would be imposed on vessels transiting the Strait of Hormuz, easing concerns over the earlier proposed 20% transit charge.

Market gains were broad-based, led by commercial banks, investment banks, cement and selective oil and gas stocks, where UBL, Engro Holdings, National Bank of Pakistan, Meezan Bank, Habib Bank and Fauji Fertiliser were among the major contributors. The recovery suggested that the previous day's sell-off was largely sentiment-driven, with investors likely to refocus on fundamentally strong sectors, if geopolitical tensions remain contained, Sheraz added.

Arif Habib Limited (AHL) analyst Ali Najib said the market witnessed renewed buying interest as investors accumulated selective blue-chip stocks at attractive valuations following Tuesday's sharp sell-off. However, he noted that geopolitical uncertainty continued to linger, with no meaningful signs of de-escalation following the collapse of last week's US-Iran ceasefire, keeping overall investor sentiment cautious.

Najib said media reports suggesting the government was considering shifting to a daily pricing mechanism for domestic petroleum products remained on investors' radar. UBL, Engro Holdings, NBP, Meezan Bank, HBL, FFC, Engro Fertilisers, Lucky Cement, Askari Bank and Maple Leaf Cement attracted renewed buying interest, collectively contributing 1,211 points to the index.

"While attractive valuations are expected to encourage selective buying, a sustained recovery will likely depend on easing regional tensions, stable oil prices and improving investor confidence," Najib wrote.

Overall trading volumes decreased to 583.8 million shares compared with Tuesday's total of 912.6 million. The value of traded shares stood at Rs26 billion.